BNPL is set to transform the e-commerce space and payments ecosystem in India. The BNPL payment option is widely available during checkout on key e-commerce websites. As online shopping grows, the acceptance of this payment option is likely to increase. Even before the pandemic, online shopping was growing in popularity in India driven by growth in Internet and smartphone usage. Moreover, favorable government policies as well as regulatory frameworks have further propelled online shopping growth.
Though in the infancy stage, BNPL has gained immense popularity in the country. With hidden charges impacting the growth of credit industry in India, there are only 55 million credit cards in circulation currently as opposed to over 900 million debit cards. This could work well for BNPL in India as it is expected to bridge the gap in the lending sector.
The adoption of BNPL has accelerated in India especially during COVID-19 due to affordability and convenience offered by the service. For instance, Pine Labs, a BNPL EMI platform, reported 60-70% more demand for its service versus January 2020. Similarly, ZestMoney’s BNPL demand reached 140% of pre-Covid levels, reflecting accelerated consumers interest.
BNPL is especially popular among millennials and Gen Z and is being often opted by young or new-to-credit population, many of whom do not own a credit card. Milliennials possess strong intent and purchasing power and are wary of using a credit card and paying interest and fees. This could attract this age group toward BNPL as it provides a revolving line of credit.
In India BNPL was previously mostly used for buying electronics, but now customers are purchasing a wider range of products including personal care, home improvement, and kitchen products using BNPL option. Also, there is increased adoption of BNPL payment option for various categories including edtech, high-priced smartphones, big appliances, electric vehicles, clothes, and travel.
In the offline BNPL space, Pine Labs is one of the leading players. Other players operating in the BNPL market include Simpl, ePayLater, Zestmoney, Paytm Postpaid, PayU’s LazyPay, Amazon Pay, and Flipkart Pay Later.
Apart from these players, banks have also forayed into the BNPL space and are coming up with 0%-interest credit cards as well as their own BNPL service. For instance, ICICI Bank rolled out a mobile-only BNPL option for in-store purchases; along with its online pay later option, in November 2020. ICICI collaborated with Pine Labs, Indian merchant platform, to enable customers pay for their purchases in three to eight monthly installments.
Moreover, e-commerce companies such as Amazon introduced BNPL service, Amazon Pay Later, in India in April 2020. Due to the pandemic, customers are opting for online shopping which is helping BNPL gain popularity as it acts as a micro finance alternative for customers offering a sense of ease.
Many startups such as MoneyTap, a digital consumer lending startup, launched BNPL solutions in February 2021, to offer accessible, affordable, and 0% (equated monthly installments) EMI options to consumers. The company also plans to offer other financial such as EMI cards and 0% EMI Pay Later Card in the coming months.