What is “Buy Now Pay Later”?

Buy Now Pay Later (often shortened to BNPL) is a short-term financing method that lets consumers purchase goods or services immediately while deferring payments into fixed installments, often over four to six weeks. This payment model operates at the point of sale, with a third-party provider paying the merchant upfront and then collecting the deferred payments from the customer.

BNPL has fundamentally changed how we pay, modernizing traditional credit and payment systems. This approach gives businesses faster access to cash while offering customers a much more flexible way to manage their spending.

What BNPL regulations are banks facing in 2025?

Regulation is intensifying for banks offering Buy Now, Pay Later services, driven by global concerns over consumer debt and a need for greater transparency. In the United States, the Consumer Financial Protection Bureau (CFPB) has begun to treat BNPL providers like credit card issuers. This subjects them to key protections under the Truth in Lending Act, requiring them to offer consumers the right to dispute charges and receive regular billing statements. This change aims to ensure that BNPL products are held to the same standards as traditional credit. Meanwhile, the European Union’s revised Consumer Credit Directive (CCD2) is expanding its scope to include BNPL loans, even for small, interest-free transactions. The core requirement is that lenders conduct thorough affordability assessments to prevent over-indebtedness, a significant shift from BNPL’s typically instant-approval model.

For banks, these regulations create a dual-edged situation. While they increase compliance costs and operational complexity, they also offer a strategic advantage: By leveraging their existing infrastructure and expertise in risk management to provide transparent, compliant BNPL products, banks can build consumer trust and gain a competitive edge over less-regulated fintech rivals.

How does BNPL address payment friction?

BNPL is gaining traction by offering a seamless, digital alternative to legacy trade credit systems. It streamlines transactions by providing instant credit decisions for buyers, eliminating the time-consuming manual processes of traditional invoicing and credit checks. This instant underwriting, often powered by AI-driven risk engines, significantly reduces the friction at checkout for wholesale and enterprise purchases. For suppliers, it ensures immediate payment and offloads the risk of non-payment, which frees up cash flow and reduces administrative overhead.

What are the main advantages of a BNPL program?

BNPL offers a powerful dual-benefit model that drives value for both merchants and lenders.

• For merchants, the primary appeal is a direct boost to their bottom line. By offering flexible payment options at checkout, they can significantly increase conversion rates and average order values by up to 20-30%. This is especially effective for attracting younger, price-sensitive consumers who might otherwise abandon their carts due to high upfront costs. Furthermore, merchants are paid the full amount upfront by the BNPL provider, mitigating their credit risk.
• For lenders, BNPL represents a strategic entry point into the consumer finance market. Their revenue is generated primarily from merchant discount rates, which are typically a percentage of the transaction value. These fees provide a more predictable income stream than traditional consumer credit, which relies heavily on interest. Lenders also benefit from low customer acquisition costs, as the BNPL service is integrated directly into a merchant’s checkout process, allowing them to acquire new users at the point of sale. This gives them access to valuable customer data that can be used for cross-selling other financial products.

How does Jifiti enable BNPL for lenders?

Jifiti’s technology empowers lenders to offer their own branded BNPL solution through a white-labeled platform. This enables financial institutions to embed credit and payment options directly into a merchant’s checkout experience under their own brand, not a third party’s. Jifiti’s platform is fully compliant and scalable, allowing lenders to maintain control over the customer experience and data. It provides the infrastructure for a lender to offer a comprehensive suite of lending products, including BNPL, seamlessly across any channel.