With U.S. economic sanctions compounded by the Iran war sending prices soaring, corporations in Iran are pushing so-called "buy now, pay later" consumption in which people buy goods first and pay later.
On the 15th, according to the Financial Times (FT) and Iranian local outlets, Iranian corporations have recently been encouraging spending by delaying payment time points for everything from retail goods to travel products. FT said more than 10 online platforms in Iran now offer credit-purchase services such as buy now, pay later (BNPL), and some do not charge separate fees or interest.
SnapPay, Iran's leading e-commerce company, has put up billboards around Tehran that read, "Buy now, pay later." SnapPay offers services that allow customers to pay all at once at the end of the month without interest or fees, or in installments over four months, for a variety of products including clothing, mobile phones, gold and vacation travel, up to a limit of 500 million rials (about $270). It is effectively a credit transaction.
It is unusual in Iran, where the rial keeps depreciating, for credit transactions that can disadvantage sellers to spread. Most Iranians have until now bought goods with debit cards or cash instead of credit cards. But as inflation has intensified and purchasing power has declined, sellers are accepting losses to engage in credit transactions.
Iran's economy has struggled under long-running U.S. sanctions, and with the Iran war breaking out, people's wallets have grown thinner. According to Iran's Statistical Center, as of the 22nd on the previous month, the month-over-month inflation rate reached 130%. Local media said much of the increase came from surging food and clothing prices, with some food items up more than 110%.
Earlier, state-run IRNA also reported that as inflation has intensified in recent years, many households have had to rely on credit purchases not only to use consumer goods, home appliances and digital devices but also medical and education services, adding, "More consumers are using buy now, pay later."
Experts say the spread of credit transactions shows Iranians are bracing for a prolonged economic downturn. Ali Saedvandi, founder of the private financial and economic education institute EconClinic, said, "As inflationary pressure reduces consumers' purchasing power, it reveals the urgency felt by producers and suppliers."
However, there are considerable concerns about the spread of credit transactions as the rial loses value. When consumers buy goods in installments through online credit platforms, sellers do not receive full payment immediately but settle after a set period, so if the rial continues to fall, sellers' real income can decline.
Mehdi Hadian, deputy head of the Currency and Banking Research Institute at the Central Bank of Iran, said in an earlier interview with the semi-official YJC that BNPL has spread in recent years through platforms, adding, "This trend must be accompanied by precise policymaking, transparency in interest rates, and the establishment of an appropriate system to control the size of customers' liabilities. Only then will the expansion of digital credit not lead to increased financial risk for households."