The impact of ‘Buy Now, Pay Later’ on India’s financing landscape


Over the last 10 years, Buy Now Pay Later (BNPL) has been a popular type of financing, especially since BNPL specialists like Affirm and Klarna have gained prominence. The demand for BNPL in India has been increasing for roughly 2-3 years, and it has been accelerated by COVID-19.

BNPL became more than just a handy payment option; it basically relieved borrowers’ financial stress by providing no-cost EMIs.

The Pandemic brought in a New Era

The lockdowns boosted consumer demand for e-commerce services. Instead of digging deep into their pockets, BNPL assisted clients in breaking down significant costs into smaller, interest-free EMIs. BNPL not only made it easier to buy everyday necessities but also made aspirational items more accessible.

The symbiotic link between e-commerce and BNPL has a bright future, according to trends and predictions. According to Goldman Sachs, the Indian e-commerce sector is expected to expand to $99 billion by 2024, driven by consumer demand.

A trend in youth 

For all of these customers, BNPL offers a quick and convenient alternative. The registration process is straightforward and may be started and finished during e-commerce site checkout. Customers get instant clearance and don’t have to deal with any unnecessary paperwork. These benefits appeal directly to digital natives who are accustomed to lightning-fast speeds and ease at their fingertips.

Most significantly, BNPL provides a formal microlending product in a relaxed, user-friendly environment. It’s a flexible option that appeals to today’s young, who are notorious for demanding immediate satisfaction. In addition, BNPL alleviates the financial strain that many families endure throughout the holiday gift-giving season.

The Road to Financial Inclusion

There is a large underserved population in India with little or no credit history, owing to low credit card usage and historically tight qualifying standards for formal lending. This issue fosters a loop in which persons seeking formal loans are turned down owing to credit ratings that are either unavailable or insufficient.

            New-to-credit clients are incorporated into the country’s formal financial ecosystem thanks to BNPL’s use of alternative data sources for underwriting.

Throughout this decade, the shift to digital solutions is projected to accelerate. And, as cell phones and internet access become more widely available in India, BNPL payment companies’ reach will only expand.

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