Why the “Buy now, pay later” that Amazon, PayPal, and banks like Santander with Zinia already use has become fashionable

The fever for deferred payment is so high that even Santander has launched an exclusive platform, Zinia, for this new way of paying in stores.

I have to confess: in the last few months I have bought a high-capacity hard drive deferring payments 4 months without interest, on Amazon. I’ve even bought video games on Steam with the payment in 3 installments without PayPal interest.

Would you have made these purchases if you had to pay cash? Probably not. And here we have one of the keys to its implementation.

Surely you have seen it too, because they are already in all stores: Amazon, FNAC, platforms like PayPal, etc. Is deferred payment without interest, in 3 or 4 times.

It should not be confused with the classic installment purchase over 3, 6, 12 months, even over several years, with interest, which has been offered for some time by the banks themselves, or financial entities such as Cofidis, and which are also integrated into the payments of almost all major businesses.

The new system interest-free installment purchase It is offered by the businesses themselves, or by fintech such as the aforementioned PayPal, or others like Klarna or Afterpay.

They are based on a short deferral period of 3 or 4 months, and there is usually a minimum amount of purchase. On Amazon, for example, it’s from 75 euros.

For the client it is completely free, without hidden costs. If you buy a mobile for 200 euros, you pay for it in 4 installments of 50 euros on Amazon, or in 3 installments of 66.66 euros on PayPal, for example.

The financial entity pays the full product to the store, and becomes the client’s lender, taking charge of collecting the installments. These deferred payments are charged monthly to your card, or to the fintech account.

If the product is returned, payments are canceled and you get your money back.

And where is the business if there are no interest or commissions?

Stores don’t lose money because they receive full payment instantly, only from the fintech, instead of the customer. And they are interested in this system because customers buy more things, and more expensive, that they would not buy in cash or with interest.

The business of PayPal and the like are in that they charge a commission from the store for each installment sale. The business is interested in paying the commission, because as we have said with this system they sell more products, and more expensive.

It seems that the idea works, because even the banks want their piece of the cake. as reported Business Insider, Santander has presented today Zinia, a platform focused on this type of deferred purchases without interest.

As Ezequiel Szafir, CEO of Openbank, explains to Business Insider: “It is an important day for the industry because it is the first time that a bank with the size of Santander has the technology to play in a field of equals with fintech being regulated“.

Banks complain that fintechs, technology companies that have financial businesses, have an advantage because they are not regulated like banks.

Zinia, which already has 2 million users in Germany, will allow defer purchases without interest in 14 days, 1 month and 3 months, in both online and physical stores.

A new way of shopping that seems advantageous for everyone. But experts warn: you have to be careful with postponing purchases, because we tend to buy more than we can pay, and then many monthly payments accumulate, which put us in trouble.