BNPL has lots of benefits to people who are smart and disciplined. However, even for those people, using Amazon Pay Later can bring sleepless nights and waste their hard-earned money in the name of delayed repayments. To understand how repayments work, let’s go through how repayments currently work on my credit card.

Credit Card Repayments

I got my credit card from the bank (where I have a savings account). So, I have set up an auto-pay facility for my credit card repayments. So, I don’t really track when they are paid. Even if the auto-pay facility fails for some reason, I can blame my bank for their technical glitch. The auto-pay may fail when the due date falls on a bank holiday. So, to avoid this scenario, the credit card due is always set to fall on a bank working day. For example, on one of my credit cards, the usual due date is the 7th of every month. However, if the 7th is a Saturday, Sunday or any other irregular bank holiday, the due date is automatically shifted to the 8th or 9th (if the 8 of the following month is a holiday too). It is just a matter of tweaking the software that sets the due date. It is not rocket science to configure such things. Even with such a fine-tuned auto-pay facility, the auto-pay has failed on two occasions for me. Software is prone to technical bugs. So, I don’t blame the people who developed it.

Whenever the auto-pay facility is about to deduct the payment from the bank account, I get notified two working/business days ahead of the due date via SMS and via e-mail. So, on the actual due date, I have a recurring calendar alert that alerts me to check for auto-debit SMS, e-mail or the actual debit notification from the bank (again via SMS and e-mail). If there is no such info, I immediately log into my bank’s app and pay the due manually no matter where I am at that time. Only once, just after I paid the due manually, the auto-debit routine got triggered, resulting in another payment for the same account. I didn’t care, as it goes as an advance payment for the current/next billing cycle. The actual amount was also much less than what I normally spend. So, it was not a big deal.

In my 10+ years of using credit cards, on less than 5 occasions, the auto-pay facility didn’t work as expected. I was still able to go past these issues with reminders.

Let’s find out what happens with the Amazon Pay Later.

Amazon Pay Later

Amazon Pay Later can be configured to use NACH or UPI Autopay for automatic repayment of due on the due date. NACH works 24x7. It doesn’t mean it is flawless. Technical glitches happen. What happens when NACH debits on time, but credits after a day due to a bug. The late payment fee will be applied almost immediately on the following day. Additionally, you are likely to get multiple calls from the recovery department on why you missed the repayment. Even if you show proof that the debit was on time, you can’t reverse the late payment fee as those things are automated. Will Amazon help in such cases? I doubt it. Amazon will provide us with the contact details of the lending partner and communicate with the lending partners to resolve any issues.

With a bank, you can schedule a visit to the nearby branch and try to resolve the issue in person. With the lending partners working miles away, there is no human touch while resolving such technical issues.

There is more to it…

Limit enhancements are hard to get on a credit card. However, with a particular Amazon Pay Later, I saw LE within a month of opening the account and utilizing only Rs.200. What’s more… the auto-debit amount won’t be updated automatically. You have to do that manually. If you thought otherwise, you’d awaiting a huge slap in the face.

Amazon Pay Later doesn’t require any additional authentication while paying for your purchases for any amount! Let that sink in. Even with UPI Lite which we use more frequently than Amazon, we can only make payments until Rs.500. With Amazon Pay Later, your actual credit limit is the only limitation. No password or PIN is required to spend it.

Paycheck to paycheck

Amazon Pay Later is most useful for someone who runs paycheck to paycheck. The dues are settled on the 5th of each month. So, you can spend as much as you wish and then pay for it on the 5th of the following month. Works well for salaried class with discipline..

In short…

Avoid any BNPL at all costs! Use a credit card instead! If you don’t have a credit card, no worries. Banks are ready to provide a secured credit card for a fixed deposit as low as Rs.2000.