I'm planning for a trip from the US to Iceland and I've noticed some hotels give the option to pay now or later. I'm specifically talking about Expedia but they all seem to be the same anyway. I've compared it to some hotels in my local town, and the prices for both options are the same. But at the Iceland hotels the pay now option is typically cheaper. In one instance I could save $50 by paying now for a 2 night stay. The pay now option is also cheaper than booking directly with the hotel.
So what are the difference besides the obvious? I did find a couple questions similar to this one, but they were only about having the same prices for both options.