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China’s Shift in Financing - The Pay Now Buy Later Scheme


The Pay Now Buy Later reverse-credit model has become widely used in China. In this setup, the customer pays in advance to the shop and receives bonus credit or additional services to use later. The more they pay upfront, the more bonus value they receive.


The mass adoption is driven by the local payment providers Alipay and WeChat Pay, who offer ease of use of the system for both the customer and the shop.


However, without expiry limits and with limited control over how the credit is managed, the model has also attracted opportunists and outright fraudsters. Nearly half of the consumers who used these schemes ended up losing money when businesses shut down or disappeared before providing the promised service.


This story shows that payments and banking are deeply connected to how a business earns, grows, and sustains itself. Those who take the time to understand them will always have a competitive edge. What matters is whether you understand the mechanics behind them.


 
 
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