Although there is a huge gap between credit demand and supply and credit access, especially for young and new-credit customers, due to restrictions on credit card issuance by some large banks and payment networks – ‘Buy Now, Pay Later’ (BNPL) e- Commerce is becoming a preferred means of payment for transactions.
“Currently, only three out of every 100 Indians own a credit card. In addition, the cumbersome credit card application process exacerbates the problems of young Indians who demand hassle-free and fast experience,” said Anup Agarwal, PayU’s head of business. LazyPay, a company owned by BNPL.
According to data released by the RBI in March last year, there are only 62 million credit cards in circulation in the country. For just a rough comparison, LazyPay—, launched in 2017, has a pre-approval base of 62 million subscribers, of which 4 million users are currently active. “We’ve disbursed over $ 900 million in credit to customers on FY21 and estimated to hit $ 2,500 million on FY22. In addition, LazyPay has seen a 70% increase in user acquisitions in 2021 as more and more customers, especially from outside the top 10 cities in India, are leaning towards convenient payment options for their purchases, ”Agarwal added.
So, what is BNPL? “Simply put, through BNPL, the consumer can make a purchase and pay for the purchase at a later date (without any additional charge). It aims to further enhance the consumer experience to enable friction-free trade, ”said Nitya Sharma, co-founder and CEO of BNPL Platform Simple, which has grown rapidly since its inception in 2015 and now has over 15,000 merchant partners and 25 million users across India. There are 6
Not surprisingly, the BNPL is bound to experience a huge upsurge in the coming years. According to a report released by management consulting firm Redscare in February this year, the fintech subdivision is growing at 65% year-on-year and is set to touch a staggering ~ 40 billion by 2025. This is especially true for India According to a new report from global market research and data analytics firm YouGov, more Indians (28%) are likely to purchase using BNPL services in the next 12 months than consumers in other markets around the world.
But why is BNPL becoming so popular among Indians, especially among the youth? BNPL offers benefits and affordability in its current form. In terms of convenience, late payment is a low-ticket-size solution that customers use so they can enjoy the experience and avoid the hassle of paying in advance with each transaction. This is an interest-free payment option if paid within a 15-day payment cycle, as is followed by LazyPay. “On the other hand, BNPL is a great ticket size solution for affordable customers who want to buy the desired product. Or pay for the services without any delay and later in small EMI, ”added Agarwal. EMIs range from zero to 3-12 months with minimal interest.