Agriculture is comparatively a new sector that is taking advantage of the installment system. This is basically the result of the high livestock prices and commodities, which compelled the farmers and small businesses to resort to this deferred payment method. Additionally, drought and other disasters like the mouse plague and floods are among the factors that gave rise to buy now, pay later (BNPL) in agriculture. For instance,
agPay is an Australian BNPL firm that entered the agrifinance market in November 2021 to help farmers with their working capital needs. The company provides instant funds to the suppliers or the merchants, while the farmers need to repay the loan within six to 12 months of the loan approval. Importantly, agPay approves capital between US$50,000 and US$1 million within 48 hours of submission of documents.
The company has a dashboard designed in its system, which provides the farmers with information on the credit limit, balance as well as past and future invoices, accessible through their smartphones, laptop, and computer. A mixed cropper got benefitted from this scheme of the company and opined that after uploading the financial documents and cropping plan, agPAY immediately gave approval and documents in 48 hours.
Therefore, through easy online access to credit to fund crop inputs, livestock, and wool, this fintech firm is expected to cater to more farmers in the coming months for summer cropping as well as for the winter season in 2022. Additionally, this fintech firm is planning to launch a rewards program to attract more customers over the longer run.
Similarly, DelayPay is an Australian BNPL company helping agricultural businesses with easy access to credit. The company specifically helps to pay the suppliers immediately and provides a time limit of 6 months to repay the loan. Consequently, the farmers and small businesses who suffer from cashflow, or stock up on supplies, are benefitted from this product. These fintech firms, basically, leverage artificial intelligence and other systems to approve the primary producer's balance sheets and their cropping plans and history.
Similarly, in November 2021, an Indian agritech firm, Arya.ag brought BNPL products for the agricultural buyers of grains, oilseeds, pulses, and many more of nearly 150-200 tonnes of produce. On this platform, the buyers can access credit up to INR 2.5 million (US$32,612) without any interest rate for 14 days, while the sellers get upfront payment. Thus, the cash challenge is solved immediately, helping the buyers’ access credit instantly.
Since Arya.ag is bringing together multiple players offering BNPL services on one platform, the firm is anticipated to observe a significant rise in its customer base over the next four to eight quarters in the country. Importantly, in US$370 billion markets of non-perishable agriculture, these platforms are expected to witness growth with more farmers, FPOs, and agribusinesses start selling on these platforms.
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