The credit industry experts have noticed that the pay later cards are the future of the credit industry in the country. Credit cards offer a large variety of added benefits and thus their importance has increased in the past years. The future is now based on the pay later cards wherein the ease of making payments is maximum and the costs associated with these cards are also less than the costs associated with the credit cards.

The term used for these cards is Buy Now, Pay Later(BNPL). These are proving to be excellent alternatives to credit cards. The customers can buy commodities immediately and can pay later for the same. The concept is extremely popular among the younger generation. The working if explained in a brief is such that the payment for any commodity or service bought or used is done by a company on behalf of the customer. The customer can then pay back the company with easy installments which are calculated every month. The option is attractive provided the customers are paying the installments and the bad debts are limited to a certain fixed number.

What is the Difference Between A Credit Card And A Pay Later Card?


Credit Cards 

Pay Later Cards

Costs incurred

The price of credit cards is more than that of pay later cards. The costs incurred for credit cards are hidden which makes buying credit cards a costly affair. 

The model of pricing is low cost and very transparent. Hence the popularity of pay later cards is expected to surge in the coming years. 

Credit history

An important prerequisite for availing a credit card is good credit history. The lenders will do a thorough check of the credit history and also the other details of the applicant before granting the credit card 

On the other hand, no record of credit history is required for the later cards. The pay later cards have a penal interest and fee associated with them which is levied if the payment is not made in time.

Interest Free Period 

The interest-free period of credit cards is standard, and hence the separate credit cards also come with a standard interest-free period in the market.

For pay later cards, the interest-free period can go up to 48 months. As the payment is deferred without any interest component, the pay later cards seem to be a more preferred option.

The approval process

The approval process for a credit card is lengthy and time-consuming as all the details of the applicant are thoroughly checked by the lender first before granting the credit card.

On the other hand, for pay later cards, there is no tedious process that the customer has to go through to avail of a pay later card.

The availability of cashback and reward points

One advantage of having a credit card is that the cashback and the reward points that one earns are useful in the event of traveling, shopping etc.

For pay later cards, these schemes or advantages are not applicable and this can be a negative point for the pay later cardholders. 

Interest rates

The interest rates for credit cards go up to 48% and the rates are fixed in the case of credit cards.

For the pay later cards, the interest rates are up to 24% and they vary depending upon various factors. 

Repayment option 

The credit card repayment option lets you repay the outstanding amount with a minimum amount due and the interest is charged on the remaining amount.

For pay later cards, the EMIs are broken into smaller cost components which help the customer avoid a heavy debt burden.

Working of Pay Later Cards

The working of pay later cards is more or less similar to that of credit cards. The model is different in only certain terms and conditions that they offer.

The process goes as follows:

For using a pay later card, a purchase has to be made from a retailer who is participating in the same scheme. The retailer offers the option to use the pay later card. A small down payment has to be made by the customer to the retailer and the remaining amount is paid by the customer in easy installments with zero interest levied on the remaining amount. The installments can be paid via bank transfers, debit cards, credit cards or directly as bank transfers.

Eligibility of Pay Later Cards

For availing of the Pay Later Cards, the individual should be

  • At least 18 years of age. The maximum age limit is 55 years in some cases.
  • The individual should be a resident of India.
  • The individual must reside in Tier1 or Tier2 cities only.
  • The bank account and KYC should be complete and certified
  • The individual must be a salaried employee in any organization.

Advantages of Pay Later Cards

  • The affordability of any goods or services in the market is increased because of the pay later cards.
  • The pay later cards offer instant credit to the customer
  • The transactions with these cards are safe and secure
  • The repayment tenure can be chosen by the customer which is the most attractive feature
  • The EMIs are interest-free and thus pay later cards are preferred over credit cards
  • The process to avail of a pay later card is simple and hassle-free.

Some Pay Later Cards in the market are

  • ZestMoney
  • Simpl
  • Lazypay
  • AmazonPay
  • FlexMoney
  • EpAyLater
  • Ola Money Postpaid

FAQS of Pay Later Cards versus Credit Cards  A Comparison

1:Are Pay Later cards a loan?

Yes, it is a type of an installment loan where the repayment has to be made via easy monthly installments by the customer

2: Are Pay Later Cards interest-free?

No, interest is charged on these cards which depends upon the amount spent. Repayment tenure, credit score etc. Initially, these cards offer an interest-free period.

3:Is credit score important for Pay Later Cards?

Yes, the credit score gets affected if the payments are not made on time for the later cards. The credit score is not of much importance while availing credit in case of paying later cards.