0% interest buy now, pay later: how it can be free, and when it isn't
Interest-free instalments are real: merchants, not borrowers, pay for most BNPL. Three ways a 0% plan can still cost you, and a one-minute check that it's free.
"0% interest" is the most repeated promise in buy now, pay later, and the most doubted. The doubt is healthy. Nobody lends money for nothing, so when a plan says the instalments cost you nothing extra, the right question is: then who is paying?
The answer is known, and it is not a trick. But the same two words are also used by plans that do cost you something, moved to a line of the receipt you were not told to read. This article explains how 0% can genuinely be free, the three ways it sometimes isn't, and a one-minute check that tells them apart.
Who pays, if you don't
The Bank for International Settlements, which studies this market across countries, puts it plainly: "The cost of the platform-based BNPL service is borne primarily by merchants." Popular services "are interest-free if instalments are paid on time", and "merchants pay high fees to transfer credit risk to the platforms" (Cornelli et al., 2023). Australia's central bank found the same thing earlier: "the majority of BNPL revenue was from merchant fees" (Fisher et al., 2021).
In other words, a shop pays the plan provider for the extra sales that instalments bring, the way it pays a card company a slice of each transaction. The shopper gets the credit free because the shop has decided the sale is worth the fee. That is a business model, and a stable one.
The three ways a 0% plan can still cost you
1. The markup
The oldest move: the interest is folded into the price. The plan is 0%, and the laptop that costs ₦350,000 for cash costs ₦395,000 on the plan. Nothing on the receipt says interest, and the total is still ₦45,000 higher. The check is the cash price, on the same day, from the same seller. If the plan price is higher, the plan is not free.
2. The late fee
"Interest-free if instalments are paid on time" is doing a lot of work in the BIS sentence above. The fee for being late is where some 0% plans make their money, and it lands on the people least able to pay it: the US regulator found 63% of borrowers held more than one BNPL loan at a time at some point in a year (CFPB, 2025), and the UK regulator found users "almost twice as likely to be in serious financial distress" than the wider population (Chan et al., 2025). A late fee must be disclosed, like any price: Nigerian law bars charging "a price for any goods or services higher than the displayed price" (Federal Republic of Nigeria, 2018). So ask for it in writing, and treat it as part of the price of a bad month.
3. Fees by another name
Processing fees, activation fees, insurance you did not ask for, a charge for paying early. Each is a line that is not called interest and costs you money. Providers know this is where the suspicion lives, which is why so many say the same thing: Klump promises "No Hidden Fees" (Klump, 2026), SLOT "no hidden charges" (SLOT, 2026). The words are a claim. The written total is the proof.
The one-minute check
Before you agree to any 0% plan, write down four numbers and add them up.
| Line | What to write | What it should be on a real 0% plan |
|---|---|---|
| Cash price today | The same device, same seller, paid in full | The starting point |
| Deposit plus every instalment | Add them all | Equal to the cash price |
| Any other fee | Processing, activation, insurance, early repayment | ₦0 |
| The late fee | The amount, and when it applies | Stated in writing, and avoidable |
If the second line equals the first and the third is zero, the plan is free as long as you pay on time. If not, you have found the cost. Either way, you know what you are signing.
How Pody approaches it
Pody sells the device itself, at market price, and the instalment plan on top of it carries no interest, no hidden fees and no markup. Run the one-minute check on a Pody receipt and the lines read: device price, interest ₦0, fees ₦0, markup ₦0, total equal to the price.
- Every cost on screen before you confirm. 20% today, the rest in instalments you choose, and the total shown at checkout. See how it works.
- The one exception, stated upfront. A late payment fee may apply if you miss a date. It is in the terms before you agree, not discovered after. Read the terms.
- Pay early for free. Clearing a balance early costs nothing and counts in your favour.
- Devices at market price from the makers and their authorised distributors, sealed, with the full warranty. No plan price and cash price: one price.
0% interest is real when the merchant is paying and the receipt proves it. It is a story when the cost has moved to a line you were not shown. Add up the four numbers, and you will always know which one you are looking at.
To see a 0% plan written out on your own device price, try the pay small small splitter.
Sources
- Chan, E., de Mauro, A., Shaw, J., Hainsworth, S., Mitchell, M., Norrgren, H., Firth, C., & Sheth, J. D. (2025, July 18). Distress deferred? The impact of Buy Now Pay Later credit on consumer indebtedness and arrears (Occasional Paper 69). Financial Conduct Authority. Read the paper
- Consumer Financial Protection Bureau. (2025, January 13). CFPB research reveals heavy buy now, pay later use among borrowers with high credit balances and multiple pay-in-four loans. Read the release
- Cornelli, G., Gambacorta, L., & Pancotto, L. (2023, December 4). Buy now, pay later: A cross-country analysis. BIS Quarterly Review. Bank for International Settlements. Read the article
- Federal Republic of Nigeria. (2018). Federal Competition and Consumer Protection Act 2018, sections 114 and 115. Via LawGlobal Hub. Read the sections
- Fisher, C., Holland, C., & West, T. (2021, March 18). Developments in the buy now, pay later market. Reserve Bank of Australia Bulletin. Read the article
- Klump. (2026). Pay in instalments. Klump Technology Company. Checked 19 October 2026. Visit the page
- SLOT. (2026). Buy now, pay later. SLOT Systems. Checked 19 October 2026. Visit the page