Buy Now Pay Later Apps in India – use with caution
In India, making payments has become easier lately, because almost everything can be done online. There are various payment options available suiting each and everyone. Additionally, there is a new method of payment called “buy now, pay later” (BNPL). BNPL arrangements are increasingly popular form of payment, particularly for online shopping.
If you’ve done any online shopping recently, you may have seen the “buy now, pay later” payment option. BNPL is widely used for online shopping. Companies let their consumers make purchases and then pay over time in instalments. After making the purchase there is a small down payment to be made; it can be a small percentage of the total amount. Each company has its own terms and conditions regarding instalment payments. Some companies may require payment within a week, while others may be willing to extend it for few months. The company itself sets the instalment payment amounts.
Fun fact! BNPL typically has no negative impact on credit scores, although missed or delayed payments can affect the credit score.
BNPL has exploded in popularity in India. The current BNPL market is worth $3-3.5 billion (Rs 22,500-26,250 crore) and is expected to reach an eye-popping $45-50 billion (Rs 3.37-3.75 lakh crore) by 2026, according to consultancy firm RedSeer.
Rs 8.65 lakh crore for personal loans at banks and Rs 1.23 lakh crore for outstanding credit card debt. The growth thesis is simple. India’s credit card population is only 67 million In comparison, the current count of 250 million Indians making digital spends on apps and e-commerce portals will rise to 500-600 million in the next three to four years. This is the BNPL target audience.
Here are few companies offering BNPL arrangements:-
LazyPay: LazyPay provides a combination of Simpl and ZestMoney offerings. Users can shop online with one tap and clear dues every 15 days or convert them into equated monthly installments (EMIs). The startup also provides loan options of up to roughly US$1,300 (INR 100,000). https://lazypay.in/https://lazypay.in/
Paytm Postpaid: In 2019, payments giant Paytm entered the BNPL segment in India with its Postpaid offering. Paytm’s Postpaid allows users to shop online and clear the balance next month. Bills are generated on the 1st of every month and can be paid till the 7th. https://paytm.com/loans-credit-cards/paytm-postpaid/
OlaMoney Postpaid: Ride-hailing Company Ola, the Uber of India, launched its BNPL offering with ‘OlaMoney Postpaid’ in 2018. Ola’s BNPL offering provides standard features like interest-free credit with 15-days repayment. The payment method can be used to pay for Ola cab rides https://www.olamoney.com/olamoney-postpaid/index.html
Amazon Pay Later: customers can only sign up for Amazon Pay Later through the mobile application at present. Users can avail of interest-free credit and repay in full within 15 days or in installments with interest within three to 12 months. https://www.amazon.in/gp/help/customer/display.html?nodeId=GJ626ASQQ6PD2KZY
Flipkart Pay Later: Flipkart also launched a similar BNPL option last year. The payment method offers repayment tenure of up to 35 days. Moreover, a unique feature of Flipkart Pay Later is the option to make partial repayment of bills. Customers can pay a minimum due amount, including a convenience fee, on or before the 10th of the month. The remaining balance can be cleared in the next bill cycle and users can continue using the payment method without penalties or suspension of their account. https://www.flipkart.com/flipkart-pay-later-store
BNPL is a convenient way to pay for purchases over time, and it frequently has zero percent or lower interest rates than credit cards. Additionally, you don’t need good credit or a high credit score to be approved for BNPL, but these benefits come with drawbacks as well. BNPL can be a trap that you may get stuck into and can affect your financial life. This facility can be tempting and can make you an impulsive buyer as you don’t have to pay first to make a purchase; it can also be difficult to keep track of your payments with BNPL, and missing or late payments can result in late fees or damage your credit score. Furthermore, payments may continue even if the item has been returned.
The concept behind BNPL is that consumers should be able to buy everything they need right away without worrying about paying the entire price at once, but rather according to convenience. One needs to have the self-control to avoid making impulsive purchases and being a reckless spender, to pay bills on time, and to be extremely aware of their finances in order to avoid falling into the trap of using BNPL.