Buy Now Pay Later (BNPL): what precautions should you take?

The Buy Now Pay Later (BNPL) is a payment method that allows you to buy immediately and pay later. In 2023, 42% of French people have used this service according to FEVAD (Federation E-Commerce and Distance Selling). However, this solution also attracts fraudsters, in particular through identity theft and document fraud, exposing traders to significant risks. We tell you more!

What is Buy Now Pay Later (BNPL)?

Buy Now, Pay Later (BNPL), or “Buy now, pay later” in French, is a payment solution. Its purpose? Enabling consumers tobuy goods or services immediately and pay for them later. The consumer can thus spread his payment in installments without interest.

This payment method is generally offered by fintech companies in partnership with online sales platforms.

What are the benefits of Buy Now Pay Later for consumers?

Buy Now Pay Later offers several benefits for consumers:

• Payment flexibility : consumers can split the cost of their purchases into several payments, which relieves the burden of a single immediate payment.
• Better budget management : by staggering their payments, consumers can better manage their cash flow, especially for unexpected purchases.
• The absence of interest or fees : if payments are made on time, BNPL options do not charge interest or fees. This method of payment is therefore becoming more advantageous than conventional credit cards.

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Users should remain cautious because a Delay Or a failure to make payments may result in additional fees !

What are the benefits of Buy Now Pay Later for retailers?

The Buy Now Pay Later payment method also brings benefits for merchants:

• The increase in sales : Customers can make larger purchases by staggering payments, which encourages them to buy more.
• Improving the conversion rate : Customers are more likely to complete a purchase if they don't have to pay right away. This thus reduces the cart abandonment rate.
• Attracting new customers : offering flexible payment solutions attracts a wider customer base, especially those looking for easy financing options.

What types of fraud can you avoid with Buy Now Pay Later?

Buy Now, Pay Later (BNPL) fraud is a method where individuals exploit payment method flaws to obtain goods or services without intending to pay for them.
To do this, fraudsters use stolen information Or falsified documents ! We'll tell you more in the rest of this article.

Identity theft

To open a BNPL account or to make purchases, a fraudster can usurp the identity of a third person. He then uses his personal information (name, address, card number, etc.). The fraudster receives the goods or services, while the legitimate victim is billed and in debt.
The consequences are serious: the legitimate consumer ends up with unexpected invoices, which leads to disputes to prove that he did not make these purchases!

Want to read more? Bank fraud: the risks and consequences incurred

Modifying your personal information to obtain credits

During a Buy Now Pay Later fraud, the scammer may provide falsified personal information. Its purpose? Obtain credit approval via a BNPL. Fraudsters then submit fake bank statements or forged pay slips to qualify for higher credit amounts.

Businesses grant credits based on false documents, which leads to significant losses when payments are not made.

The creation of false proof of address to fraud on a large scale

Individuals must present residency documents (electricity bills, rental leases) to create a BNPL account.

Scammers can sometimes present false residence documents at an address that is different from their real location. This can be used to divert deliveries or to create multiple identities for large-scale fraud.

What is the impact? Retailers deliver products to fictional or untraceable addresses, making it difficult to recover goods in the event of fraud.

To learn more about bank fraud, listen to our expert Ramy Ahmed talk about it! Summer interview: bank fraud

How do you prevent Buy Now Pay Later fraud?

To prevent Buy Now Pay Later (BNPL) fraud, it is essential to have robust protection measures in place.

For more information: The 4 advantages of deploying an anti-fraud plan

Finovox offers innovative solutions to detect false documents and identity theft, two of the main methods used by fraudsters in the context of BNPL. The automatic verification of identity documents, coupled with real-time authenticity checks, makes it possible to secure transactions as soon as users register.

In addition, analyzing suspicious buying behavior and proactively monitoring unusual activities provide enhanced protection. Finovox helps BNPL solutions quickly identify fraud attempts, while reducing friction for legitimate customers.

By combining advanced technology and fraud detection expertise, Finovox ensures a reliable solution to secure Buy Now Pay Later.

Want to learn more? Do not hesitate to contact our anti-fraud experts!

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