Being an expat is an amazing adventure… with some drawbacks, especially when you want to access financial services in your country of destination. Can expats jump on the ‘buy now, pay later’ trend?
Thankfully, Xpats.digital is working to make things easy for you, whether you have recently settled down abroad or you are global digital nomad.
Buy now, pay later (BNPL) allows you to buy things and get them way before you pay them, so it gives you extra time to get the money, or to organize your finances in your new country.
BNPL solutions are continuing to grow in popularity, especially due to the covid-19 crisis and the boom of e-commerce sales, as people seek alternative ways of financing and they are challenging the legacy financial services companies. According to Insider’s Intelligence, BNPL will account for a $680 billion in transaction volume worldwide in 2025. That forecasts a compound annual growth rate (CAGR) of 13.23% from the $285 billion the industry was estimated to record in 2018.
While BNPL is already a useful tool for people in their home countries, it is almost vital as an expat. When living abroad, being able to buy things and pay later can help you set up in your new country.
What exactly is buy now, pay later (BNPL)? Can expats jump on the ‘buy now, pay later’ trend?
BNPL is a financing system that allows shoppers to buy products or services and pay for them at some point in the future, sometimes even interest free.
The new trend of buy now, pay later is also known as point-of-sale (POS) financing or point of sale instalment loans. The broad term of POS financing describes any method that gives consumers a flexible option to pay for their products. Most of the times, the shopper applies for this instalment loan at the of paying, in the retail checkout.
This type of financing breaks payments in smaller monthly amounts that can be later automatically deducted from your debit card, your bank account or the credit card.
Some of the most popular companies that are offering buy now, pay later payment plans are Affirm, Afterpay, or Klarna.
What is the difference between BNPL and buying with a credit card?
Both systems involve delaying the payment for a product or service, but BNPL usually comes with no interest or fees.
When using a credit card to delay payments, you are required to do a minimum payment each month. However, you can continue to carry debt infinitely, as long as you pay the minimum each month.
BPNL contracts come with a fixed schedule for payments (usually several weeks or even months). You know the due each month, and it works similarly to a personal or consumer loan. But here, the interest is low or zero even.
Moreover, many BNPL providers don’t check credit when approving shoppers, which makes access to financing easier.
On the other hand, credit cards can be used almost anywhere, unlike some BNPL services, as they are linked to a specific purchase from a specific merchant.
Lastly, BNPL does not contribute to create a credit record like you can in credit card scheme.
In any case, it seems that BNPL makes people feel they have more control over their payments, as per various research studies.
How can you apply for a BNPL financing?
To be eligible for BNPL, you need to shop at a participating retailer, and opt for BNPL while checkout.
If your request is approved, you only pay in advance a small part of the purchase. Sometimes you only pay around 20 or 25%, and then delay the rest in easily payable amounts. The approval or rejection comes back quickly as it is intended to offer financing on midsize purchases of $250 – $3,000.
The request will be approved or dismissed based on a credit check that shows your eligibility for the BNPL financing.
BNPL from the retailer or service provider perspective
As said before, the BNPL comes in handy because it gives customers convenience when managing budgets and purchasing in advance. Moreover, it increases trust between retailers and consumers. The retailers trust the consumer (there is also a credit check, which makes all trust-relationships easier).
Therefore, benefits of BNPL are linked to an enhanced buying experience, which can be measured not only by increase in sales but also in level of customer engagement, retention and purchase frequency. We can say that BNPL is extremely linked to optimized consumers’ LTV.
BNPL impact on sales Can expats jump on the ‘buy now, pay later’ trend?
BNPL point-of-sale loans -when offered at zero commission- increase postponed payment sales by between 20% to 30%. Moreover, it has also lifted the average ticket size between 30%-50% and the shopper becomes more close to the retailer. This means higher probabilities for the customer to return to the shop, according to RBC Capital Markets research.
BPNL has also increases the frequency of purchase, which is great news for companies offering this type of point-of-sale financing.
BNPL for expats Can expats jump on the ‘buy now, pay later’ trend?
Considering the amount of advantages BNPL offers, you may be wondering if as an expat you can have access to financing your purchases with it.
The answer is you can, thanks to our Xpats.digital BNPL and credit passporting solutions, that allow you to benefit from the same features as if you were a local by transfer your credit history from your country of origin to where you are currently working.