Home Amazon Amazon BNPL

What You Need to Know About Amazon BNPL (2022)

by OneCommerce
234 views

According to a survey of U.S consumers, 83% of consumers use BNPL services to make major purchases and 61% of them are using BNPL services to handle their spending and budget for purchases. Furthermore, it is considered a practical alternative to using personal loans and credit cards. 

For Amazon shoppers, the platform has launched the Amazon BNPL service to bring a more comfortable payment method to them and enhance their buying experience.

Learn how you can benefit from the service to help save money on your Amazon purchases.

Learn the basics of BNPL 

What Is Buy Now, Pay Later?

Buy Now, Pay Later (BNPL), known as “point of sale installment loans”, is a kind of short-term financing that enables customers to buy items now and pay for them later in the future, sometimes without incurring interest. 

The “Buy Now, Pay Later’’ service allows customers to purchase products and pay for them later on a future date.

The “Buy Now, Pay Later’’ service allows customers to purchase products and pay for them later on a future date.

BNPL Distribution Models

There are four main distribution models, including:

  • Through merchants: The BNPL provider is integrated directly at a merchant’s check out or as part of a platform the merchant uses.
  • Through network:  A merchant integrates with a network which has a network of lenders. Financing type and fee structure will vary based on the type of lender for a given transaction.
  • Through credit card: With your existing credit card, you are able to convert credit card charges over a certain amount into an installment-type loan.
  • Through white label: This is the BNPL version of the classic store-brand credit card

Why use the BNPL service?

For consumers, the amount of information they must supply does not vary by product because BNPL providers offer a simple and consistent experience without requiring additional fields beyond a merchant’s standard checkout flow.

In addition, the BNPL services are interest-free. Therefore, they are more appealing to customers than traditional financing tools like credit cards.

Sellers can improve the conversion rates by using the BNPL payment method

Sellers can improve the conversion rates by using the BNPL payment method

For merchants, the BNPL payment option can help them boost conversion rates and average order value by lowering customers’ hesitation and reducing cart abandonment.

How does Amazon BNPL work?

The Amazon BNPL service allows buyers to split a purchase into five payments. They will make the initial payment when the products are on delivery, then four additional payments within the next four months using a credit card linked to your Amazon account.

The table presents when you will make your payments as a result of your selection of the Amazon BNPL service

Here’s when you will make your payments as a result of your selection of the Amazon BNPL service. Source: Amazon

Payments in the Amazon BNPL program are usually equal; however, if the purchase amount isn’t evenly divided by five, the final payment may be less.

Note

  • You can use the Amazon BNPL service for only one item per product category or device family at a time. For example, you can’t use BNPL to buy two Amazon Fire tablets. 
  • You can prepay your next installment or pay off the entire balance before it’s due since there’s no interest involved

What are the advantages and disadvantages of the BNPL service of Amazon?

Honestly, no matter how good the service is, there are always advantages and disadvantages that may be of your concern. Considering Amazon BNPL’s pros and cons when choosing a payment method is never a redundant thing to do.

You can benefit from the Amazon BNPL service in many ways

There is a list of benefits you can get when using Amazon BNPL. They are not only the reasons why you should choose Amazon BNPL but also the plus points that make the service outshine the others.

  • Your products bought with Amazon BNPL will be shipped after your first payment. This makes the service different from layaway programs which give you the bought items only after you’ve finished a series of payments over time.
  • There is no minimum or maximum purchase amount required when using Amazon BNPL.
  • When you set up monthly installments, you do that directly through your Amazon account as you do not need to involve a retailer and a lender.
  • The service doesn’t impact your credit score in any way, which can happen with other BNPL apps. 
  • Amazon doesn’t use your credit report to determine your eligibility while other BNPL services require a soft or hard credit check when you apply.
  • Unlike other BNPL services, Amazon doesn’t provide a credit limit because it doesn’t offer a credit line. In fact, it’s simply another payment method the retailer offers. 
  • Amazon doesn’t report your BNPL payments to the credit bureaus, which means late payments won’t damage your credit score.
  • There’s no minimum credit score requirement because Amazon doesn’t run a credit check when you choose monthly payments as your payment method. However, Amazon may consider other factors, such as your transaction history and the nature and price of the qualifying item.
  • Amazon doesn’t charge interest or fees to use its BNPL service.
The Amazon BNPL service has both advantages and disadvantages that you may concern

The Amazon BNPL service has both advantages and disadvantages that you may concern

Yet, there are some drawbacks of the Amazon BNPL service

Don’t get into Amazon BNPL too fast if the drawbacks below make you feel uncomfortable. However, those things are minor and won’t affect your experience much as long as you know how to avoid them.

  • The service is limited to qualifying new products sold and shipped by Amazon, as well as qualifying or new certified refurbished Amazon devices sold and shipped by the retailer’s digital services arm.  
  • You can’t use the service with other retailers or pay your monthly bills like rent, utilities, etc. because the Amazon BNPL service is only for qualifying Amazon purchases. 
  • Using BNPL multiple times could make it harder to keep up with all of your payments while payment security is strong. 
  • Because you don’t have to pay in full upfront, it may lead to overspending, which can hurt your financial well-being. 
  • Amazon only allows you to use the service with a credit card and you’ll have to make sure you pay your credit card bill to avoid interest charges and late fees. If you miss a payment or reach a high balance on your card, it would harm your credit.
  • Certain Capital One credit cards can’t be used with the Amazon BNPL service.

Amazon partners with Zip, Affirm, and Barclays to deliver the Pay-Over-Time option at checkout

Amazon is teaming up with 3 financial companies to provide its customers with various installment-based payment options.

Zip was one of the first BNPL services that Amazon teamed up with.

Amazon teamed up with other BNPL services to deliver the Pay-Over-Time option.

Zip 

Amazon Inc’s Australia unit has signed up Zip Co. Ltd (formerly known as Quadpay) to offer its BNPL service to Amazon buyers in Australia. Its payment system has gone live on the Amazon Australia site since 2019.

Zip offers two products, Zip Money and Zip Pay. So, you can purchase using Zip on Amazon.com.au with either a Zip Pay or a Zip Money account.

Learn how to use Zip on Amazon here!

Affirm

Amazon strikes a deal with Affirm, the US-based BNPL provider. They have reached an agreement to offer their US customers monthly payment plans for purchases of $50 or more for the first time.

Affirm’s BNPL checkout option will be available to certain Amazon customers in the U.S. The partnership will allow eligible U.S. purchases to be split into smaller, monthly installments. 

Learn how to use Affirm on Amazon here!

Barclays 

In 2021, Amazon made a deal with Barclays to enable its customers to pay in installments in the UK. Installments by Barclays is a reusable credit account that allows you to fragment the cost of purchases over £100 across fixed monthly payments. 

The service, Installments by Barclays, will give customers better flexibility to pay for their purchases, with the plan of spreading payments over three to 48 months.

Learn how to use Barclays on Amazon here!

Conclusion

The BNPL has become a popular payment alternative, especially when purchasing online. 

Now eligible Amazon shoppers can make five monthly payments over four months on eligible products thanks to the Amazon BNPL service.

Make your purchases now and select the BNPL option that suits you the most.

Related Posts