The recent upsurge of Buy Now Pay Later plans (BNPL) being taken up by South African households clearly exposes a shift in consumer behavior when comparing against the ‘lay-by” way of buying.

Lay-by vs. Buy Now, Pay Later (BNPL): what’s the difference and what’s changing in consumer behavior?

What is the difference?

– Lay-by (lay-by/lay-bye): you pay for a goods’ price in installments before you take possession. The retailer reserves the item, and ownership typically transfers only after full payment. If you miss a payment, the item may be repossessed by the retailer, but you don’t incur interest.

– BNPL: you take the goods home (or use the service) now and pay later, in installments over a set period. It usually involves little or no interest if paid on time, but penalties and late fees apply for missed payments, and some BNPL plans may charge interest or high fees for extended terms. BNPL is often offered by fintechs and integrated into online checkout.

Behavioral change driving BNPL growth in SA:

– Immediate gratification vs. delayed payment: BNPL lowers the perceived upfront cost, encouraging impulse buys and larger baskets.

– Perceived affordability and budgeting psychology: people may treat BNPL as “no-cost” credit if initial payments are small, leading to looser budgeting discipline.

– Convenience and accessibility: quick approvals, short-term commitments, and seamless checkout reduce friction compared to traditional credit.

– Optics of creditworthiness: BNPL can feel like a safer option than card debt for some, masking underlying spending pressure.

– Shifting risk perception: households worried about tight calendars and cashflow may prefer staggered payments, even if total cost rises.

Be mindful of the pitfalls

– Total cost and fees: late fees, processing charges, and interest on some plans can make items far more expensive.

– Debt piling and cross-usage: multiple BNPL accounts can lead to unmanageable debt and adverse credit outcomes if not tracked.

– Enforcement and collection risk: fewer protective norms than traditional loans; disputes can be opaque.

– Impact on budgeting: the ease of adding more BNPL commitments can erode long-term savings and financial resilience.

What you should do

Compare total cost, set reminders, limit BNPL use to planned purchases, and track all payments in one budget.