• Mon. Jun 24th, 2024

Unpacking the Risks: Small Businesses and ‘Buy Now, Pay Later’ Services

BySamantha Jones

Jun 11, 2024
Implications of the new ‘buy now, pay later’ rule for small businesses providing the service

Small businesses are increasingly turning to “buy now, pay later” services as a way to spread out payments for their purchases over time. These payment plans are often marketed as having zero or low interest rates, making them an attractive option for consumers. However, there are some risks associated with offering these services that small businesses should be aware of.

One potential problem is that if something goes wrong with a payment plan, consumers may blame the small business even if they were not directly involved in the process. This can lead to negative reviews and damage to the business’s reputation. According to a report from the Consumer Financial Protection Bureau (CFPB), more than 13% of “buy now, pay later” transactions involved a disputed charge or return in 2022, totaling $1.8 billion in transactions at five large BNPL firms.

Another risk for small businesses is the cost associated with these payment plans. Typically, businesses must pay a fee of 1% to 3% for each transaction processed through these companies. This can have a significant impact on profit margins and may not be worth it for some businesses.

To help protect small businesses from these risks, the CFPB has implemented a new rule that requires “buy now, pay later” companies to offer consumers the same legal rights and protections as credit card lenders. This includes the ability to dispute charges, easily obtain refunds for returned items, and receive billing statements for transparency and accountability. By ensuring that consumers have these rights and protections in place, small businesses can have peace of mind knowing that they are providing their customers with a safe and secure payment option.

By Samantha Jones

As a dedicated content writer at newszxcv.com, I bring a passion for storytelling and a keen eye for detail to every piece I create. With a background in journalism and a love for crafting engaging narratives, I strive to deliver informative and captivating content that resonates with our readers. Whether I'm covering breaking news or delving into in-depth features, my goal is to inform, entertain, and inspire through the power of words. Join me on this journey as we explore the ever-evolving world of news together.

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