“Buy Now, Pay Later” solutions on the rise – regulatory aspects in Bulgaria

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The rapid growth of online shopping as a result of the COVID-19 pandemic has led to an increased demand for different payment options for consumers at the checkout. One such option that is increasingly popular with consumers is the “buy now, pay later” (“BNPL”) solution.

The hot trend in consumer credit

BNPL allows consumers to defer the payment of the product and repay the purchase price in several instalments over a certain period of time, usually at no interest. BNPL is also a palatable option for merchants, as it gives them another avenue to generate sales by providing consumers an accessible opportunity to acquire products on credit. Such manageable payment options are also likely to strengthen consumer loyalty and to attract a younger audience.

Consumers are usually able to access the BNPL solution through the merchant’s platform – the BNPL service provider offers the BNPL model to consumers at the checkout on the merchant’s website. Typically, consumers are asked to register with the BNPL service provider (if they are not an existing user), provide certain personal information and enter into a loan agreement with the provider. Another way of structuring the BNPL solution is through the direct offering of BNPL products by merchants.

That Bulgaria is no exception to the trend and growth in the popularity of BNPLs is evidenced by the emergence of new fintech BNPL providers on the market as well as commercial banks starting to offer similar products.

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