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Walmart unveils new ‘buy now pay later’ program – using it will cost some customers more and there’s a purchase minimum
One's Buy Now, Pay Later annual percentage rate is something to review for shoppers looking to use the payment method
WALMART has started to roll out a new Buy Now, Pay Later service for customers, but it may end up costing shoppers more money.
The national grocer's new Buy Now, Pay Later program will be the second of its type, following the Affirm option.
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The new payment method, developed in collaboration with tech firm One, will be available nationwide at over 4,600 Walmart locations.
The feature only applies to certain purchases between $100 and $3,000.
One's Buy Now, Pay Later program allows customers to take certain items home by paying only a minimum balance or percentage of the overall purchase amount.
Electronics, jewelry, power tools, and automotive accessories are eligible for the program.
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But groceries, alcohol, and weapons are excluded.
Buy Now, Pay Later payment programs have generated over $19 billion in online spending between January and March 2024, according to Adobe Analytics.
In 2023, the payment option was responsible for $75 billion of online spending.
However, many have criticized the program's annual percentage rate (APR) and the risk shoppers take when opting for the payment method.
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The One feature has an APR between 9.99% and 35.99%, depending on a patron's credit score.
In fact, a customer could suffer pitfalls if they fail to cover the due payments.
If a shopper persistently misses payments, their case could be sent to a debt collector, financial planner Martha Callahan told Fox Business.
"It's similar to using a credit card where you make the purchase now, but when it comes time to pay that debt, if you don't have the cash on hand to make the payment," Callahan told the outlet.
"You're just digging yourself into a deeper financial hole."
George Kamel, a Ramsey Solutions personal finance expert, also underscored the financial risk shoppers face.
"Buy Now, Pay Later, is just adding more pain to people's budgets," Kamel added.
"These companies are really scummy. They'll market this to young people, saying, 'Hey, you deserve financial breathing room in your budget, don't pay $100, just pay $25.'
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"What that does is that at the end of the month, you have all these Buy Now, Pay Later payments you can't make.
"We find that a third of users fall behind on their payments, trigging insane interest fees, 30%, and the companies brag to retailers, saying, 'Hey, use our service, your customers will spend 45% more on the average store order.'"
What is Buy, Now, Pay Later?
The Buy Now, Pay Later payment method is starting to roll out in several online website, and in-store.
What is Buy Now, Pay Later, and how does it work?
- Buy Now, Pay Later (BNPL) is a form of short-term financing that allows consumers to make purchases and pay for them over time.
- Some companies allow their customers to pay only a minimum balance or 25% of the overall purchase amount.
- Consumers then pay off the remaining amount in a series of interest-free payments over weeks or months.
- Payments can be deducted automatically from your debit, credit cards, or bank accounts.
What are the cons of Buy Now, Pay Later?
- Some Buy Now, Pay Later companies conduct a hard pull of a consumer's credit file, which could lower one's credit score by a few points.
- Some companies require consumers to pay the remaining balance within biweekly payments over a month-long period.
- Other companies give consumers three months, six months, or even longer to pay off purchases.
- Missing a Buy Now, Pay Later payment could result in late fees.
- A consumer who persistently misses payments could be reported to a debt collector, affecting one's credit score.
- Some retailers' Buy Now, Pay Later policy could affect a shopper's ability to return an item.
- Some companies allow merchants to return items, but the Buy Now, Pay Later agreement remains intact until a shopper proves the return has been accepted and processed.
- Paying off a Buy Now, Pay Later balance generally does not help boost one's credit score.
- Paying back Buy Now, Pay Later purchases does not earn consumers rewards or cashback points like a bank credit card.