What the new 'buy now, pay later' rule means for small businesses offering the service

NEW YORK — NEW YORK (AP) — “Buy now, pay later” services are a popular way consumers pay for goods.

The payment plan is usually marketed as zero interest or low interest, and allows consumers to spread payments for purchases over several weeks or months.

Since shoppers like the service, offering it can be a plus for a small business. But since the payment plan is offered by third-party companies – such as Affirm and Klarna – there may also be risks involved.

When something goes wrong, consumers may blame the small business, even if they had nothing to do with the payment plan. And things can go wrong. A 2022 Consumer Financial Protection Bureau report found that more than 13% of BNPL transactions involved a disputed charge or return. In 2021, consumers disputed or returned $1.8 billion in transactions at five major BNPL companies, the CFPB said.

The plans also cost small businesses money – typically a 1% to 3% fee, which can increase when margins are tight.

But the CFPB has issued a new rule that may ease the minds of small business owners. The agency said the buy now, pay later companies must offer consumers the same legal rights and protections as credit card issuers.

This means consumers have legal protections including the right to dispute charges, easily get a refund directly from the lender for a returned item and receive billing statements.

Related Posts

  • Business
  • June 15, 2024
  • 1 views
  • 3 minutes Read
Salesforce (CRM) Q1 2025 Earnings Report

Marc Benioff, CEO of Salesforce, will appear on a panel at the World Economic Forum in Davos, Switzerland on January 18, 2024. Stefan Wermuth | Bloomberg | Getty Images Sales…

  • Business
  • June 15, 2024
  • 3 views
  • 4 minutes Read
You may owe the IRS money on Monday; skipping payment could cost you hundreds of dollars

Yellen says IRS audits have increased to focus on the very wealthy Yellen says IRS audits have increased to focus on the very wealthy 02:39 Some taxpayers may not be…

Leave a Reply

Your email address will not be published. Required fields are marked *

You Missed

New Jersey Senator Bob Menendez's strategy to blame his wife in a bribery trial could have pitfalls

  • June 15, 2024
New Jersey Senator Bob Menendez's strategy to blame his wife in a bribery trial could have pitfalls

FTC Chair Lina Khan on Startups, Scaling and 'Innovations in the Field of Possible Law Violations'

  • June 15, 2024
FTC Chair Lina Khan on Startups, Scaling and 'Innovations in the Field of Possible Law Violations'

Following a routine makes it easier to build wealth. Here's how

  • June 15, 2024
Following a routine makes it easier to build wealth.  Here's how

Investors are wondering whether technology can continue to lift the S&P 500 to new records this summer

  • June 15, 2024
Investors are wondering whether technology can continue to lift the S&P 500 to new records this summer

New research approach: investigating the mouthfeel of food with a microscope

  • June 15, 2024
New research approach: investigating the mouthfeel of food with a microscope

Salesforce (CRM) Q1 2025 Earnings Report

  • June 15, 2024
Salesforce (CRM) Q1 2025 Earnings Report

Quantum entanglement measures the rotation of the Earth

  • June 15, 2024
Quantum entanglement measures the rotation of the Earth

DOJ Destroys GOP Conspiracy That Controlled New York Trial

  • June 15, 2024
DOJ Destroys GOP Conspiracy That Controlled New York Trial

Nvidia's 'Nemotron-4 340B' model redefines synthetic data generation and competes with GPT-4

  • June 15, 2024
Nvidia's 'Nemotron-4 340B' model redefines synthetic data generation and competes with GPT-4

China needs bond market reforms to rein in rising debt, S&P Global says

  • June 15, 2024
China needs bond market reforms to rein in rising debt, S&P Global says

The tasty flavors of chocolate can pose a risk in other desserts

  • June 15, 2024
The tasty flavors of chocolate can pose a risk in other desserts