Unpacking Buy Now Pay Later

By Litha Maqungo
11/16/2022 | 3 min read

Designer shoes, the latest TV, a brand new Apple watch – all suddenly attainable because retailers let you Buy Now, Pay Later. It’s almost as easy as filling in your card details, without the need for you to have the actual money to pay in full right there and then.

But what exactly is Buy Now Pay Later and how does it differ from the old school lay-by system?

Buy Now Pay Later

The new solution came onto the market as an alternative mechanism to traditional credit payments. It gained a foothold in the South African market in the 2020/2021 period because of the massive rise in online shopping that was catalysed by the pandemic. Buy Now Pay Later (BNPL) usually crops up as a payment option when you shop on popular e-commerce websites. The frictionless integration into the typical payment options and minimal information required makes it really attractive to consumers, especially since the split payments are interest free and you get your item upfront.

In South Africa the main providers of the BNPL solution are Payflex, PayJustNow, TymeBank and ZeroPay. Thousands of merchants already offer this option and analysts predict that this will only grow with time. By 2028 it’s predicted that over USD4.8 billion Gross Merchandise Value (i.e. total sales) will be processed through BNPL providers in the country.

The interest free payments with goods delivered to your door seems to good to be true, after all where do the providers like Payflex make their money? The answer lies with the retailers, they are the ones that carry all the costs which is usually a percentage of the sale value. From their perspective it’s a worthwhile cost to acquire and convert more clients particularly in the online space.


A common concept, this is the predecessor to the exciting BNPL model. Lay-by allows you to split the payment of an item over a few months. You simply put down a deposit and make payments over a period of time until you have fully paid the balance. Just like BNPL the payments are interest free but, the difference is that you have to wait until you’ve fully paid before you receive your item.

While lay-bys are still common, the main attraction with Buy Now Pay Later is the instant gratification of receiving your item as soon as you’ve made your initial payment. However, this is also where some of the danger lies. The concerns around BNPL, especially in the current economic climate, are that consumers will find themselves overspending and putting themselves into precarious short-term debt situations.

Access to credit can be a powerful tool to help you build the life that you want. But, it only works when you use credit wisely and only spend what you can actually pay back. A great starting point is understanding what your current credit score is.

Get your free credit report from one of SA’s leading providers, Clearscore


By Litha MaqungoTags:
  • Credit Health
  • finances
  • getup hacks
  • Managing your Money
  • Personal Finances


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