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 the French have used this service according to FEVAD (Fédération E-commerce et Vente À Distance). However, this solution also attracts fraudsters, notably through identity theft and document fraudThis is a major risk for retailers. We tell you all about it!

Buy Now Pay Later (BNPL): what is it? 

Buy Now, Pay Later (BNPL) is a payment solution. Its aim? To enable consumers tobuy goods or services immediately and pay for them later. Consumers can pay in instalments without interest. 

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

What advantages does Buy Now Pay Later offer consumers? 

Buy Now Pay Later offers a number of advantages for consumers: 

• Flexible payment Consumers can spread the cost of their purchases over a number of payments, relieving the burden of a single, immediate payment.
• Better budget management By staggering their payments, consumers can better manage their cash flow, particularly for unexpected purchases.
• No interest or charges If payments are made on time, BNPL options charge no interest or fees. This makes this method of payment more advantageous than traditional credit cards.

What advantages does Buy Now Pay Later offer retailers? 

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

• Increased sales Customers can make larger purchases by paying in instalments, which encourages them to buy more.
• Improving the conversion rate The shopping basket: customers are more likely to complete a purchase if they don't have to pay immediately. This reduces the shopping basket abandonment rate.
• Attracting new customers offering flexible payment solutions attracts a wider customer base, particularly those looking for easy financing options.

What types of fraud should be avoided with Buy Now Pay Later?

Buy Now, Pay Later (BNPL) fraud is a method used by individuals to exploit the flaws in the payment method to obtain goods or services without intending to pay for them. 
To do this, fraudsters use stolen information or falsified documents ! Read on to find out more.

Identity theft 

To open a BNPL account or make purchases, a fraudster can impersonate another person. The fraudster uses 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 far-reaching: legitimate consumers end up with unexpected bills, leading to disputes to prove that they didn't make the purchases in the first place! 

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

Changing personal details to obtain credit 

In a Buy Now Pay Later scam, the fraudster can provide falsified personal information. Their aim? To obtain credit approval via a BNPL. Fraudsters then submit false bank statements or falsified pay slips to qualify for higher credit amounts.

Companies grant credit on the basis of false documents, resulting in significant losses when payments are not made.

Creating false proof of address to commit large-scale fraud

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

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

What impact does this have? Merchants deliver products to fictitious or untraceable addresses, which makes it difficult to recover goods in the event of fraud.

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

How can you prevent Buy Now Pay Later fraud?

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

To find out more, click here: The 4 advantages of deploying an anti-fraud plan 

Finovox offers innovative solutions for detecting false documents and identity theft, two of the main methods used by fraudsters in BNPL. Automatic verification of identity documents, coupled with real-time authenticity checks, ensures that transactions are secure from the moment users register.

In addition, analysis of suspicious purchasing behaviour and proactive monitoring of unusual activity provide enhanced protection. Finovox helps BNPL's solutions to quickly identify fraud attempts, while reducing friction for legitimate customers.

By combining advanced technology and fraud detection expertise, Finovox provides a reliable solution for securing Buy Now Pay Later.

Want to find out more? Don't hesitate to contact our anti-fraud experts!