Mon. Jun 17th, 2024
Implications of the new ‘buy now, pay later’ rule for small businesses providing the service

Small businesses are increasingly turning to “buy now, pay later” services to attract more customers. These payment plans allow consumers to spread out their purchases over several weeks or months, making them more affordable. However, these services are offered by third-party companies like Affirm and Klarna, which can pose risks for businesses.

According to a report from the Consumer Financial Protection Bureau, more than 13% of “buy now, pay later” transactions involve disputed charges or returns. In 2021, consumers disputed or returned $1.8 billion in transactions at five major “buy now, pay later” companies, highlighting the potential risks involved. Customers may blame small businesses even if they are not directly involved in the payment plan.

In addition to customer dissatisfaction, these payment plans also cost small businesses money. Typically charging a 1% to 3% fee on each transaction, these fees can be burdensome for businesses with tight profit margins. However, the Consumer Financial Protection Bureau recently issued a new rule that aims to protect consumers using “buy now, pay later” services. The rule requires these companies to provide consumers with the same legal rights and protections as credit card lenders, including the ability to dispute charges and easily obtain refunds for returned items.

Overall, while “buy now, pay later” services can benefit small businesses by attracting more customers, there are potential risks and costs associated with offering these services. With the new rule in place

By Aiden Nguyen

As a content writer at newscholarly.com, I delve into the realms of storytelling with the power of words. With a knack for research and a passion for crafting compelling narratives, I strive to bring forth engaging and informative articles for our readers. From decoding complex concepts to unraveling current events, I aim to captivate and educate through the art of writing. Join me on this journey as we explore the ever-evolving landscape of news and knowledge together.

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