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The Rising Popularity of BNPL in India – 2021 Guide


The Buy Now Pay Later (BNPL) concept is an emerging trend in how online payments are carried out. Read on to know what makes this flexible payment method so easy and appealing.

For every business that’s online in this digital era, a significant chunk of the target group is made up of millennials. Thanks to the increased quality of education and employment opportunities, at least this generation has money to spend. Having grown up with technology, their spending habits are influenced by it to a large extent. This is what separates them from their Gen-X predecessors. They are now frontrunners in driving the trends of the e-commerce industry. So retailers have understood this, and are now offering payment options relevant to them. The benefits are not only restricted to the users, the merchants too are on the gaining side as they’ll have higher conversion rate and customer retention.

How can we properly define ‘Pay Later’?

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Pay Later, usually called Buy Now Pay Later (BNPL) is an emerging solution for point-of-sale financing. When retailers offer this solution, customers can choose a financing plan and pay in instalments rather than having to pay the entire cost upfront.

Fintech has strongly emerged recently, to address the pain points around conventional financing. Especially with the aspects of complexity and high fees with credit cards and APRs.

These Fintech companies provide pay later solutions that allow shoppers to purchase products and leverage overtime pay in a fixed number of instalments. These solutions are offered with extremely low or no interest. These bear no additional costs to the customer. There are many established, and emerging BNPL service providers like ZeroPay.

Why is the appeal of credit cards declining?

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Credit cards have always been a popular source of easily accessible and unsecured credit. But the demand for upfront personal information for credit card approval, very short interest-free periods, and extremely high rates are putting off young customers. Even the customers who are still sticking with credit cards are turning too savvy with their spending.

Many are now realizing how credit cards discourage self-control and promote unhealthy spending. This impulsive attitude developed can negatively impact other areas of your life. It’s better to steer away from their charm and stick to achieving better financial goals.

Why do millennials prefer the pay later option?

Millennials do the majority of their shopping online. This group seems to be growing weary of the traditional credit card industry. While it values privacy and is protective of personal information, the user’s familiarity with the advanced technology has made them impatient when it comes to clunky user interfaces.

The benefit they see in BNPL is that it circumvents many of the major downsides of credit cards, particularly the high-interest rates, annual fees, and confusing terms of service. The contributing factor for this attitude towards this credit might also be due to growing up in an uncertain economy and the shadow of the global financial crisis. BNPL is intentionally developed to be in tune with its credit outlook.

The younger generation desires simple and flexible payment solutions, one that suits their financial situation. They plan to avoid one-sided credit agreements having unfair interest rates. They’re proficient in identifying applications that have smooth user flow and easy navigation.

They see BNPL as a customer-friendly payment method, providing an easy, short-term, and interest-free solution. The fascinating part is, there is no formal credit agreement.

Why is BNPL a popular trend among the youth in India?

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India hosts the world’s largest millennial and Gen-Z population. This demographic is excessively indulged in smartphone usage. They find digital payments seamless compared to other modes of transaction.

For this large chunk of consumers, Buy now Pay Later is emerging as a fast and convenient option for payment. The registration process is made simple. It can be easily initiated and done during the checkout on e-commerce sites. Customers receive instant approval and don’t have to deal with cumbersome paperwork. These merits of BNPL directly appeal to the young population. They have grown up to be digital natives and are accustomed to quick speed and convenience at their fingertips.

They are card averse, and gravitate towards the ease of virtual credit options. The allure of credit cards is slowly decreasing worldwide among the millennial population.

BNPL is an agile solution that offers a micro-lending product in an informal, user-friendly manner. It significantly reduces the financial burden that many families face during the festive season. They are more worry-free to make the purchases they desire, and only pay for them through easy, small, no-cost EMIs.

ZeroPay is one such rising platform that captures all the best elements of buy now, pay later into its service. You get an instant credit without any interest and late payment fee. You’ll be rewarded with points on each repayment which you can use for later purchases. Such features appeal to the young, they desire quick solutions blended with smooth technology.

How is the BNPL industry set to grow?

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BNPL is known to boost the conversion rates and Average Order Values (AOV) for merchants. It lowers the purchase hesitation observed in the shoppers. As a convenient payment method, BNPL is expected to rise in popularity as well as increased usage. It’s expected to rise at 24.2 per cent CAGR* between 2021 and 2028. By 2028, the gross merchandise value of BNPL is estimated to be $52,827.2 million. It was $6990.5 million in 2020.

How does BNPL lead to financial inclusion?

There is a low credit card usage in India. Strict eligibility criteria to avail formal finance has alienated a large part of the population to acquire credit cards. This has created a sizable under-served population having little or no prior credit history. This deadlock situation has perpetuated a cycle wherein people are turned down due to non-existent or inadequate credit scores. With Buy now Pay Later, the customers that are new to credit are integrated into the country’s formal financial ecosystem.

This decade is sure to witness an astounding surge in applications providing digital solutions. With the accelerating penetration of smartphones and internet connectivity across the country, BPNL payment providers are likely to exponentially grow.