BNPL – Risky Bet?
The Buy Now Pay Later (BNPL) model is a popular payment plan for small holiday purchases, such as furniture, appliances, electronics, and sporting goods. To earn this plan’s benefits, the seller must offer the product for sale on their website during a specified period. Sometimes during this time period, consumers are required to make a down-payment or otherwise deposit funds into an account held by the seller. When the purchase date arrives, the consumer pays only a partial amount and is then responsible for the balance upon delivery of the product. While this type of payment plan often sounds as if it would offer greater protection to consumers, what risks do lenders face when they offer this type of financing?
Risk associated with BNPL
Potential risks from the business perspective include:
When the seller has set a specific start date for their “sale,” customers are probably less likely than usual to purchase on that day. Because customers are influenced by the start date, this may also discourage them from purchasing in the future.
Creditors not receiving payment
BNPL agreements place consumers in a position of financial responsibility for products they have purchased before they have received them. For some consumers, this is a result they could have expected and planned for. However, others may be surprised to find that the only source of funds available to repay their loan is the sale of their product, resulting in payment delays or non-payment altogether.
BNPL agreements are typically communicated through the seller’s website and on their sales flyer. While many consumers read such materials, others may not realize that they are creating an obligation to purchase an item of value. Therefore, consumers who do not comply with the agreement must be given additional information by the lender, which can also lower the success rate of BNPL financing.
Some companies that offer to buy now pay later services include BuyEasy.com, BuyLater.com , ZippyPay.com.
Why it is risky to buy using BNPL?
The decision to buy now and pay later is indeed a risky business. With sites like Rent-to-Own, which will allow you to purchase items with the option to pay in installments with no credit check, you can get things you can’t afford just yet with little or no hassle. But is this really wise?
There are many risks involved in these types of transactions. One of the most obvious is the interest rate; it will be much higher than if you could get a credit card or bank loan.
This is especially true if you have low credit and lack the ability to qualify for a traditional loan. This can prove very costly, especially if the item is something you really need or if it’s a very expensive item.
But there are other issues as well, and they are often not so obvious. For example, let’s say you’re trying to buy a car. You’d like to purchase one that has only four thousand miles on it, but you budget only three grand for the car. You’d happily pay three grand for the car (with a $200 warranty) but the dealer won’t let you drive out of the lot until you’ve paid five grand.
How much of a deal is this? You’re going to be paying way more in interest than if you had done something else that was much simpler and less risky.
The problem with these kinds of deals is that they often have hidden fees and conditions that will probably come back to bite the buyer.
If this is how you have to buy things, then you need to make sure that you are aware of your rights and how these types of deals work. You’ve heard the classic expression “Buyer Beware”; well it’s certainly true for buying now and paying later.
Paying over time reduces the risk of buyer’s remorse. If you are thinking about buying something, you may fall in love with it, but then change your mind when you actually have it at home.
This may only work if you’re not buying items that have a high resale value, so it doesn’t work for buying stuff like furniture or electronics.
If you’re paying for things over time and then end up going into debt, then it may be a good idea to cancel the payments and refocus on paying down the balance.
Many people who use buy now, pay later don’t actually have a big problem with debt and are using it as a way to save money. They certainly may not be putting their finances at risk, but that doesn’t stop them from being wrong about the concept.
BE THE CHANGE YOU WANT TO SEE IN THE WORLD
A project is a synonym for change. Project management executes the vision and mission of a change into reality by a project manager. However, there is a need to shift the parochial paradigm from managing and leading the change to making and owning the change.
The next gen project manager doesn’t just manage change and wishes for change. They take ownership and accountability to make the change happen. Using their knowledge, resources, and determination, they push through the resistance and drive the change. They may not possess all the skills needed, but they know best how to use their resources within the constraints. They are the ones who connect the dots, unearth the blind spots and influence the outcomes through cogent focus and commitment. They are determined. They transform their circle of influence. They are the Changemakers.
In today’s fast-paced world, most mediocre project managers are engrossed in following processes and systems. They do not think out of the box. Without a holistic approach to optimize current structure and systems, they fail to achieve their outcomes efficiently. They are more focused on ticking all the boxes, indulging in the quick GTM strategy.
In contrast, the Changemakers, armed with their design thinking mindset, focus not only on improving the customer experience but on overcoming resistance from all corners. With their firm beliefs and passion in stride, those people-oriented Changemakers are thoughtful, compassionate, and full of empathy. Changemakers are those people with humility and integrity who not only use their skills, expertise, and authority to bring positive change, but also to set new trends. Who doesn’t know of revolutionary changemakers like Mahatma Gandhi or Dr. Martin Luther King?
The Changemakers use their collaborative nature, expertise, and authority in a way that brings positive social change and affirms the humanity of stakeholders. Changemakers have the freedom, confidence, and societal support to address any problem and drive change. Table 1 illustrates the difference between mediocre project managers and Changemakers.
Changemakers focus on lean changes at a time which can lead to a monumental transformation or WoW (Ways of Working) revolution over time. Their primary focus is the MVC (minimum viable changes), ensuring that teams stick to changes that worked and discard those that didn’t. They ensure these changes happen gradually, not suddenly, and out of nowhere. Changemakers weigh the cost of a change and prioritize changes by considering which of them would have the larger impact in a shorter time, thus implementing it in “thin slices” that work for stakeholders. They also assess how well changes work in practicality, applying that experience for future changes.
Changemakers unconsciously follow the Agile manifestos: responding to change over following a plan and harnessing it for the customer’s competitive advantage. They make the journey cherishable, relatable, and memorable for the people they work with. Changemakers rewire the brain to change the de facto response.
The Changemaker focuses on changing culture by revamping and fixing the system. They come out of their comfort zone and move towards the learning zone, ultimately breaking into the growth zone. They are the next-gen leaders; they are the ground breakers; they are the social drivers; they are the social entrepreneurs. They are reinventing WoW. They are not only the game influencer and the game player but also the game-changer. They are the Changemakers.
It’s time for project managers to upskill and upgrade themselves. Think differently, change the game, and make the change!