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With prices rising, making big purchases or even fun purchases can be fraught with payment decisions. Should you pay in full and simply be out the cash now? Use your credit card and earn rewards, but potentially get hit with interest? Or break up the cost into multiple payments with a buy now, pay later service?
Buy now, pay later services are increasingly popular, but before you sign up, consider how your data may be used. These platforms contain sensitive personal data, so be sure you know what they do to keep this information safe.
What Is Buy Now, Pay Later Financing?
Buy now, pay later (BNPL) is a financing option offered at online and in-store checkouts allowing you to pay for a purchase over time, often without interest. Technically short-term installment loans, BNPL plans often require a 25% down payment at the time of purchase, followed by equal payments every few weeks or every month until the balance is paid off. If you miss a payment, you may be charged interest or fees.
If you've heard of Affirm, Klarna, Sezzle, Afterpay or Zip, then you are already familiar with some of the platforms that offer BNPL financing. BNPL platforms have seen explosive growth in recent years as shoppers seek ways to defer payment without added costs. But as with any payment method, it's important to understand how your data is protected when using BNPL services.
How BNPL Services Protect Your Data
As financial services platforms, BNPL businesses have access to a lot of your data, particularly financial and identification information. And like other financial services companies, BNPL providers have steps in place to protect your information.
To limit fraudsters from using your account, BNPL platforms run complex verification processes including multifactor identification and data encryption, as well as restricting who has access to your data and undergoing security audits.
You can also limit some of the uses associated with the data these platforms collect. For example, you may be able to request that the BNPL service not share information about your creditworthiness with affiliates.
You may also limit their ability to share information with other companies interested in marketing to you. Each platform has its own process for how to contact them for these requests; check your online account information or contact customer service to find out how to restrict the use of your information.
Tips to Protect Your Personal Information
All that said, much of the danger to your data when using BNPL comes from potential fraudsters accessing your account credentials to commit account takeover fraud. They may do this by purchasing your information on the dark web, using malware or attempting other types of identity theft—much of which can't be prevented by BNPL providers.
Like using other digital systems that have access to your payment information, treat BNPL like the data risk it could be by using common-sense methods to protect your personal data. When using your account, make sure to:
- Keep your passwords private and unique. Avoid telling anyone your passwords, and avoid repeating passwords with accounts to increase security despite possible data breaches.
- Set up two-factor authentication. Two-factor authentication requires you to use multiple devices to authorize a login or purchase. Before you can authorize your login, you'll likely get a push notification, text, email or phone call on another device that requires you to verify the authenticity of the action. This prevents scammers from getting into your account with just your credentials.
- Verify websites before submitting payment. Whenever entering your payment information on a website, always be sure to check if it is the legitimate website you intended to access or a sophisticated scam. If you've clicked a link from an email or text to sign up for a new buy now, pay later website, it's possible you've been lured into a phishing scam. Check the:
- URL: Is the address what you expected and spelled correctly?
- Secured status: Is there an "s" after "http" or a padlock showing beside the URL to indicate that the site is secure?
- Professional style: Does the site have the professional style you expected it to? Is everything edited and spelled correctly? Do the contact and privacy pages look real? If not, it could be a fake.
- Sign up for fraud protection. When you sign up for a fraud protection program like Experian's IdentityWorksSM, you can get alerts if someone makes an attempt to steal your identity or if your private data shows up on the dark web.
Buy now, pay later sites and apps may provide access to your credit cards or bank accounts, so it is particularly important to keep them secure and avoid scams.
Stay Safe With BNPL
Buy now, pay later platforms may be a great option to divide a payment over a short period of time, help protect your cash flow and save money that might otherwise go to credit card interest.
But it's important to remember that these platforms and apps may have direct links to your finances. Protect this data by using smart digital hygiene, signing up for identity protection and taking advantage of data sharing limitations offered by the platforms.