What's Next for Buy Now, Pay Later?
What's Next for Buy Now, Pay Later?

Buy Now Pay Later (BNPL) is a micro-credit model where customers pay little or no interest for purchases over online or offline channels. The Indian BNPL market is expected to grow to $50 billion by 2026, compared to $3-3.5 billion today. This is primarily driven by a large population of youth who may find BNPL convenient as it offers microlending in an informal way, without the cumbersome paperwork that traditional banks demand. 

Since its introduction in the market, BNPL has garnered popularity among financial institutions, merchants, and consumers alike. Today, BNPL providers have tied up with not just consumer durables chains but even with food delivery companies, travel booking players, and even grocery delivery platforms. 

Some trends that will lead BNPL in the upcoming year could be:

Greater Collaboration Between Banks, NBFC, and Payment Networks - BNPL is now not just restricted to e-commerce alone. With the advent of BNPL on PoS devices, innovative ways of financing at the point of sale have led to a closer collaboration between various entities involved. Fintechs offer brick-and-mortar banks with partnership opportunities giving them access to a whole new customer base as BNPL opens the door to credit to a largely underserved market. 

Uptick Among Tier II and Tier III Customers - Considering the smaller ticket sizes associated with BNPL, it is bound to find acceptance in Tier II and III cities. An upgrade from the traditional ‘Khata’ for smaller retailers, BNPL’s growth is due to its transparency and ease of use. With PoS machines hosting robust and secure tech stacks and tech companies forming collaborations with banks and brands themselves, pay-later debit and credit card transactions are processed within seconds. Even for low-ticket items, such as mobile phones under Rs 10,000, BNPL is made available and this will see patronage in Tier II and III cities. 

Expansion to Various Sectors - Being a bite-sized microloan product with a UPI stack and Aadhar infrastructure for support, the upcoming year will see BNPL become a choice across sectors. Apart from electronics, mobiles, groceries, and essentials, healthcare, online education, insurance, and travel are segments that stand to grow in the adoption of BNPL.

More Offline Stores and Retailers Introducing BNPL Systems - Initially, the BNPL system was introduced for online shopping. However, with in-store shopping getting back to its pace in the new normal, more offline stores have started adopting it. Instant availability of installment plans and zero-interest deferred payments available on the PoS devices as well will attract those in the 25-44 age group. In the offline market segment, the industry is projected to grow by 5X in the next five years. 

Final Word 

 As we move ahead, BNPL will be an enabler for digital transactions. The increasing adoption of deferred payments and checkout financing by offline and online platforms will take the global BNPL industry to reach $3.98 trillion by 2030. 

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