"Buy now, pay later" (BNPL) services have surged in popularity, offering consumers a flexible payment option that spreads costs over several weeks or months, often with zero or low interest. This appeal can make BNPL a valuable tool for small businesses looking to attract more customers. However, the involvement of third-party companies like Affirm and Klarna introduces potential risks. If issues arise, such as disputed charges or returns, consumers may blame the small business, even though it's not directly responsible for the payment plan. According to a 2022 report by the Consumer Financial Protection Bureau (CFPB), over 13% of BNPL transactions involved disputes or returns, amounting to $1.8 billion in 2021 alone. Additionally, small businesses incur fees ranging from 1% to 3% per transaction, which can strain tight profit margins. To mitigate some of these issues, the CFPB has introduced a new rule requiring BNPL companies to offer consumers the same legal protections as credit card lenders. This includes rights to dispute charges, obtain refunds directly from lenders for returns, and receive detailed billing statements, potentially easing the burden on small businesses.
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