Loans

The primary difference between BNPL and traditional loans is that the loan principal is disbursed to the merchant or service provider rather than to the individual directly.

Here’s how a BNPL loan works:

1. Credit Application: at checkout for a good or service, the purchaser has an option to finance the purchase with a BNPL loan.
2. Payment Terms: the payment terms are similar to that of a loan, with installment payments due over a given period (ie monthly) and term (ie 12 months).
3. Fees & Interest: BNPL loans can be zero interest / zero fee, but also commonly charge interest. Sometimes there is a processing or platform fee associated with the loan (typically a percentage of the loan principal).
4. Disbursement: once a loan is accepted, the proceeds are disbursed to the merchant