Over the past few years, the Buy Now Pay Later (BNPL) services have grown leaps and are bound to become a prominent form of financing. In India, experts say the demand for BNPL has been growing for about 3-4 years, further accelerated by COVID-19. BNPL has now emerged as a more convenient payment method essentially decreasing the financial burden on borrowers by offering no-cost EMIs.
Various BNPL providers have further developed and sweetened their offerings to help borrowers manage their finances. For instance, Simpl, LazyPay, and Ola Money are solving for one-click convenience for the high frequency of transactions. Similarly, Bajaj Finance and Zest money are solving for the affordability, by helping one to buy a fridge worth 80k for 30k and the rest can be paid by EMI. Uni Pay, on the other hand, helps the borrower in managing their cash flow problems with the Uni Pay 1/3rd Card.
While most of the pay later products in the market are digital and not physical cards – they are usually merchant dependent and only work within a merchant network and the credit lines are lower. Comparatively, the Uni Pay 1/3rd is both a physical and a digital card and runs on the Visa network, giving the borrower access across millions of merchants.
How will it benefit borrowers?
The physical card of Uni Pay 1/3rd can be used as a credit card at any merchant outlet on the visa network. Borrowers also get flexibility on a transaction level – for instance, they will get the option of choosing to split the payments into 3 parts or pay in the same month and enjoy additional cashback. For any transaction done through this card, the customer can pay over 3 months at no extra cost. For instance, if you make a transaction worth Rs 3,000 and choose the 1/3rd option, it becomes Rs 1000 month 1, Rs 1000 on the second month and Rs 1000 on the third month. And if you decide to pay back the entire amount at the end of the first month like for a typical credit card, then you will get 1 per cent cashback or reward.
Nitin Gupta, Founder and CEO, Uni says “The core idea behind the Uni Pay 1/3rd card is that it helps manage short term money needs while giving the flexibility to earn rewards as per choice. It is the longest interest-free credit product in the market. It questions traditional ethos around credit cards that penalise borrowers for short term fund requirements.”
Unlike other credit cards and BNPL options Pay 1/3rd card offers the borrowers the choice to Pay 1/3rd or get 1 per cent rewards depending on their needs, and this is customizable down to every transaction. This BNPL product offers convenience, wherein an individual can either make a purchase and pay later or make a payment or break it down into EMIs. Hence, one can divide his/her transaction into longer-term EMIs in the future.
However, Gupta adds, “Pay 1/3rd card is not a credit card but a PayLater card. A credit card has a 30 days payment cycle and the borrower gets a credit period of only 30 days.” To get a longer tenure of credit period, Uni’s PayLater card under the Buy Now Pay Later line offers the option with zero balance prepaid card. It also comes with a credit limit ranging between Rs 20,000 to up to Rs 6 lakhs. Once a transaction is completed using this BNPL option, the borrower needs to select the monthly or one-time payment option through the Uni app.
Charges and Interest rates
Late charges will be applicable for transactions that are not paid beyond the 3 months of payback time. This BNPL Pay 1/3rd card has a flat fee for paying the minimum amount and missing payment beyond the due date.
In any BNPL product including Pay 1/3rd, the minimum due amount has to be paid in every billing cycle, or else the borrower will have to pay late fees which are decided based on the slab. However, unlike a credit card, there are no interest charges. Also, if one fails to make a payment for a period, there is no fee on interest or interest on interest charged.
The Uni pay later option comes with a joining fee of Rs 1999, which is waived off till 31st December 2021.
How does this line of credit affect your credit score?
Experts say the impact of the Uni Card is similar to that of a credit card. Timely and consistent repayments will enhance the credit score and late payments will also have an effect.
