At a glance, it seems as if online buyers are already overwhelmed with the many discounts, rebates, and promotional offers being thrown their way. And thus, straddling them with an option to buy products in installments may seem too much. Are people aware of how to pay installment using credit card? More importantly, are they eager to learn?
Singapore is witnessing a boom in the e-commerce market. There is also growing adoption of alternative payment options such as ‘Buy Now Pay Later’ among the general public. This indicates that consumers are more eager than ever to buy online and make use of these attractive offers. This is precisely the reason why credit cards are embracing BNPL and collaborating with e-commerce giants. A brilliant example of such a partnership is the Lazada Citi Card. Customers across Singapore are turning to these hybrid payment methods, and it is time for you to jump aboard.
How does BNPL on credit cards work?
Buy now pay later or BNPL is an easy method of paying for a purchase by splitting the cost into smaller, more affordable installments. These installments could be paid monthly or depending upon the case, on a weekly or bi-weekly basis.
BNPL allows customers to buy big-ticket items such as fridges, furniture, or other such costly items that the customers may find hard to pay for in lump-sum. Below mentioned is the process that usually a customer has to undertake to subscribe to BNPL through a credit card on an e-commerce website like Lazada.
- When you click on checkout on the app, you would be asked to confirm the address and shipping method. After confirming these, you would be able to choose a payment option.
- This is where the option- ‘Credit Card Installment’ would be visible. You click on it and then pick the bank that has issued you the credit card, from the extended list.
- The terms and conditions of BNPL plans differ from bank-to-bank. Therefore, you would have to get yourself acquainted with the terms of conditions of your bank.
- You will be redirected to a page where you would have to provide your credit card details.
- Once you have provided the details, the page will be redirected to the payment confirmation page of your bank. On this page, you will have to enter the one-time password (OTP) that your bank will provide you on your mobile phone via a text message.
- After punching in the numbers of OTP you would be required to press enter and submit the OTP to the bank.
This is how the payment process looks like when you use BNPL through a credit card. But you are probably thinking- what about after purchasing the product? How to pay installment using credit card?
How to pay installment using credit card?
Before you learn more about how to pay installment using credit card, you should know that debit cards cannot be used for paying installments, a credit card is essential for a BNPL payment processing to occur.
- If you are contemplating buying a big product, like a TV for instance, then it is preferable if you can find a credit card that would provide you BNPL services at a 0% installment plan. A good example of such a card is the Lazada Citi Card.
- Adopting a 0% installment plan, you would essentially be splitting the cost of the product, repaying the amount in small installments over an extended timeframe. The time frame would depend upon the plan that you are selecting. There are all kinds of plans with different time frames( 3 months, 6 months, 8 months, etc.) You can select the one that suits you the best, as you won’t have to pay any interest on the outstanding amount of your invoice.
- If your credit card is offering you a 0% installment plan then those would be applicable only on certain purchases that are above a particular predetermined amount. For example, you would be only able to purchase items that are more than $100 (Singapore). However, several credit cards are now offering 0% installments on smaller purchases as well. One notable example of this is the Lazada Citi Card. Customers can buy even smaller items from Lazada on a BNPL basis.
- There is usually a one-time processing fee that the credit card will charge you for processing the plan. Only after you have paid the processing fee will the installment plan be activated. The rate of processing fee differs from card-to-card. Generally, the rate is between 1.8 to 3%.
- Once the plan is activated, you should pay your installments on time.
Things to remember about credit card installment plans
- You should know that once the plan has been activated, you should try not to pay pre-maturely and close the plan. This is because you could have to pay a penalty for ending the plan earlier than its usual course.
- Also keep in mind that your credit limit would be reduced by the original amount of the invoice, and not the amount you have paid as your first installment. For example, say you have bought a product for 1000$ (Singapore) on a plan that has 5 equal monthly installments. Then your credit card limit will be reduced by 1000$ and not by the installment amount of 200$.
Hopefully, you were able to get some insights on how to pay installment using credit card. The e-commerce market in Singapore is quickly adopting BNPL strategies to attract consumers. And online shoppers have an opportunity to milk these options to purchase things they find hard to save for.