Buy Now, Pay Later

Five thousand years ago, the Mesopotamians invented the shekels, which is now known as arguably the first form of money. We've come a long way since then, especially now with the invention of bitcoins.

A big part of the money and payment ecosystem is offering credit, and the history of credit cards is a fascinating read. Those who grew up in the nineties would probably remember the credit card imprinter. A vendor would put a credit card on top of the machine, place several layers of carbon paper, and slide the bar back and forth, making a clunky yet authoritative sound. The raised surface of the credit card (that has the customer's name and credit card information) would then be imprinted on the carbon papers.

Fast forward to the recent times and now almost every street-food vendor in Los Angeles has a credit-card reader connected to their smartphone.

Now, on top of credit cards, payment merchants have even made it easier to purchase with the option to buy now, pay later (BNPL). Using a credit card itself is a "buy now, pay later" option, but BNPL vendors like Klarna and Afterpay take it even further by giving customers the option to pay even later without a credit card.

How BNPL Works for Customers

A regular transaction involves two parties: the customer and the vendor. A BNPL transaction adds another player into the mix. When the customer decides to use the BNPL option, The BNPL merchant pays the vendor in full while the customer will pay the BNPL merchant in installments.

When the customer joins a BNPL merchant, they'll have the option to link their bank account to their BNPL account.