Buy-now-pay-later services are ramping up online sales during lockdown

Afterpay is a popular alternative credit firm that offers microloans to online shoppers. They usually generate revenue by charging the merchants a small commission. These firms offer buy-now-pay-later (BNPL) services, which has significantly benefitted people during the pandemic in various countries. The BNPL has ramped up retail sales, and people are now able to buy in bulk. Due to the surge in the corona cases, investors are predicting that the shoppers will stay away from stores. One of the key drawbacks of BNPL is bad debts; this is highly likely among the first time users. Job losses are on the rise, so this business model will be put under heavy test during the recession. When the second wave of virus hits, it will again boost the demand for BNPL.

The shift to online shopping was an anticipated move, but after the lockdown, the shift has been accelerated. In the US alone, millions of active new users have signed up for Afterpay. Retailers are also working hard to move their merchandise, and this BNPL service has received good reception. The pandemic has made the companies tighten their risk options, which might lead to a high rejection rate for loans. Due to bad debts, the BNPL service companies are reevaluating their eligibility rules.