BNPL: What is Buy Now Pay Later, How it Works?

From the introduction of new modes of payment to the modification of existing concepts into contemporary versions, the Indian payment industry is witnessing many major advancements. Buy Now Pay Later (BNPL) is one such payment method that’s gaining much popularity in today’s time.

It’s emerging as a highly convenient payment option, essentially reducing a borrower’s financial burden by offering no-cost EMIs.

Let’s take a deeper look at the very concept of BNPL, what’s driving its growth, the benefits it offers to customers and merchants respectively, and the top players operating in this payment space.   

What is BNPL (Buy Now Pay Later)?

The concept and meaning of Buy Now Pay Later (BNPL) is quite simple. It’s a new-age financial service that enables buyers to purchase a product or service and pay for it at a later stage in installments. 

Such transactions are often interest-free. However, a fee may be levied in the case of late or no payment(s). Ideally, this option targets young, new-to-credit, cash-strapped individuals who do not own a credit card. However, anyone and everyone can use this mode of payment. 

The short-term financing option is especially gaining much popularity among the masses as it enables them to buy commodities of larger ticket-sizes, converting them into affordable buying options. 

For instance, the iPhone 13, valued at INR 79,900, is a premium smartphone not everyone can afford.

With Buy Now Pay Later, a customer can convert the entire amount into small, interest-free installments and use the smartphone right away. BNPL is ideally bringing more convenience into the hands of consumers with aspirations yet low in-pocket cash.

[Suggested Read: Boost Conversions by 30% with Cashfree Payments’ BNPL Widget]

From a business point of view, Buy Now Pay Later benefits brands by increasing,

• customer lifetime value
• conversion rate
• engagement rate
• customer return rate

However, it’s equally important to note that most Buy Now Pay Later players operating in the Indian market typically offer only a 15 to 45 days interest-free period. Just a handful of them provide an option to pay through EMIs for longer tenures like 3, 6, 9, or 12 months. 

Similarly, the credit limit typically ranges between INR 2000 and INR 30,000 with only a few lenders offering a credit limit up to INR 2 lakhs. Here are some top-rated Buy Now Pay Later players and their offerings.

Buy Now Pay Later Statistics: Driving BNPL Growth In India

India is home to about 1.3 billion people. Of these, only about 60 million Indians have access to credit cards. This means, nearly 93% of the population uses other means of payment. Buy Now Pay Later taps into this market segment.

The short-term financing option has created a niche for itself in the payment industry. It has given this 93% of the population an option to avail interest-free credit facilities and make buying commodities an easy breeze. 

At present, Buy Now Pay Later in India values around USD 3-3.5 billion, which, looking at the current pace, is expected to touch USD 50 billion by the end of FY 2026. 

It won’t be a surprise to see India becoming the second largest Buy Now Pay Later market in the world by then. On a global scale, BNPL is expected to become a USD 3.98 trillion payment segment by the end of FY 2030, reports Allied Market Research. 

Market veterans and research firms like Redseer are also estimating that the current penetration of Buy Now Pay Later will increase to 80-100 million users by then, compared to current 10-15 million users. 

At the same time, Pine Labs, India’s largest Buy Now Pay Later EMI platform confirms that it saw nearly 60-70% higher adoption of the BNPL payment option in January 2021 compared to the previous year. ZestMoney too stated that it saw the demand touch nearly 140% compared to the pre-pandemic time.   

As of date, Buy Now Pay Later is one of the fastest growing online payment methods in India. It is expected to capture nearly 9% of the market’s spending by the end of FY 2024 from the current 3% stake. 

BNPL’s ability to serve the urban and semi-urban consumer segment with a weak or no credit history (ineligible to acquire loans), lack of proper financial documents, and small-ticket credit requirements will play a massive role in the growth of this payment segment in the coming years. 

Moreover, the ability of Buy Now Pay Later players to use India Stack infrastructure to make consumer onboarding easy and feasible is another reason behind its growth. Similar to many lending products, BNPL’s primary source of revenue is the amount received via late payments and merchant interchange fees. 

While Buy Now Pay Later services may strategically convey that it’s not a loan or a credit, it surely operates on an IOU (I owe you) concept, that acknowledges the presence of debt. 

Buy Now Pay Later services are aiding the Indian consumers as well as the merchants. They’re giving both the entities exactly what they need, especially with coronavirus disrupting the financial stability of consumers and the conversion rates of merchants.

In fact, experts say that Buy Now Pay Later is here to stay and grow at an unimaginable pace. 

How Does Buy Now Pay Later Work?

The Buy Now Pay Later business model sits at the crossroads of payment and lending proposition because of its lending and interest-free payment-enabling characteristics. It serves as a frictionless credit option for customers to choose and avail at the time of checkout.   

Here’s a flow to help you understand how Buy Now Pay Later works.

Buy Now Pay Later Business Model 

Ideally, two primary Buy Now Pay Later models are dominant in the Indian payments market. While one drives convenience, the other extends the benefits of credit.   

Convenience Model	Credit Model
Comparatively smaller ticket size	Comparatively larger ticket size
Usually extends about 15 days of credit period	Offers a credit period of about 3 to 12 months.
Merchants pay a small percentage of transactions to the BNPL service provider	Has two sub-categories  1. Zero-interest EMIs – Merchants pay a small percentage of the transaction to the BNPL service provider 2. With interest EMIs – Customers are charged interest. Hence, merchants pay no additional fee to the BNPL service provider
Late fee is levied to a customer	Late fee is levied to customer

According to a Buy Now Pay Later India report published by Experian, the country’s retail digital lending ecosystem is expected to touch USD 350 billion by the end of FY 2023. Digital lending players along with new Fintech businesses such as payday, SME lending, and Buy Now Pay Later, especially, are playing a vital role in boosting the growth.    

Such avenues are not only giving customers the freedom to buy commodities of their choice and not worry about the price tag, but benefitting merchants with higher engagement and conversion rate, and an increased customer return rate.

Buy Now Pay Later Vs Credit Cards 

Though the ‘Buy Now, Pay Later’ concept seems quite similar to credit card EMIs, there’s a fine line of difference between the two. Let’s take a look at them. 

	Buy Now Pay Later	Credit cards
Annual or joining fee	No	Zero to a few thousands depending upon the bank, waivers available
Hidden charges	Works on a highly transparent and low-cost pricing model	Some hidden charges may be levied on the credit card post-payment
Customer credit history	Not mandatory to have a good credit history	Mandatory to have a good credit history to avail an EMI option
Adoption	Only a handful of e-retailers and Fintechs offer BNPL services/facilities	All major banks offer credit card and EMI facilities
Interest-free/EMI period	Usually, the interest-free period extends upto 48 months. The interest rate varies depending on a variety of factors	Credit cards offer standard interest-free periodThe interest rate remains fixed
Approvals	Easy to get approvals	Comparatively difficult to get approvals
Minimum/maximum pay	Mandatory to pay fixed EMI amounts on scheduled dates	Have an option of paying a nominal amount. However, this comes subjected to the imposition of heavy interest rate
Credit limit available	INR 2000 to INR 1,00,000	No limit. Varies with credit history of customers
Acceptability	Accepted by partner merchants only	Universally accepted
Cash withdrawal	Not allowed	Allowed with separate interest charges livied
Add-on benefits	No additional benefits	Have the option to earn cashback(s), reward points, etc.
Interest levied upon non-payment	Up to 24%	Up to 48%

Buy Now Pay Later: Pros & Cons 

Let’s divide this section of pros and cons into two parts – 

• from a customer’s point-of-view 
• from a merchant’s point-of-view   

Buy Now Pay Later From A Customer’s Point-of-view

Most people think that Buy Now Pay Later is a solution built for individuals who have a very low income and live on a pay check-to-pay check basis. That’s not true. 

A series of consumer researches reveal that Buy Now Pay Later is just an excellent payment solution for every budget conscious and more credit-averse individual out there. Consumers like the concept because it gives them the flexibility to buy anything and everything regardless of the price of the commodity, their income level, and credit history.

Pros Of Using Buy Now Pay Later

Listed below are some benefits that Buy Now Pay Later extends to its consumers. 

1. Flexible Repayment Options

The entire concept and meaning of Buy Now Pay Later has been built on a flexible repayment module. One doesn’t need to pay the entire amount at once while making a purchase on a merchant site. They can simply choose BNPL as a repayment option at the time of checkout and convert the entire order value into small EMI portions.

They can then pay off the amount at regular intervals, interest-free, anytime between 15 days and 12 months depending on the terms defined by the BNPL service provider. 

This means, consumers no longer have to worry about falling short of finances or overspending their monthly budget just to buy something they want.

2. No Processing Fees

Unlike traditional credit systems that charge a processing fee, Buy Now Pay Later services have completely done away with that. The payment option is much more accessible and cost-effective than its counterparts.

3. No Hidden Charges

Usually, Buy Now Pay Later payment methods do not have any hidden charges or fees. Everything’s made wide and clear to a consumer from the very beginning. This enables consumers to make sound decisions. However, an interest is charged in case a consumer fails to make the payment on the due date. 

4. Zero Documentation Required

What makes Buy Now Pay Later a highly accessible option is that it requires no documentation work. Neither a consumer has to disclose their monthly income nor do they have to maintain a good credit score to avail the facility. Simply signup with a Buy Now Pay Later service provider, do a basic KYC check, and you’re good to use BNPL as a payment option.

5. Spread Out Payment Plans

Buy Now Pay Later understands that consumers today, especially after the outbreak of the pandemic, wish to maintain some liquid cash in their pockets. They’re skeptical regarding paying in full for a commodity, especially it’s of a larger ticket size. 

To solve the problem, Buy Now Pay Later service providers usually create a simple payment plan for such consumers. They allow consumers to split the total amount into small, equal installments that are easy to pay. 

Moreover, they automatically debit the amount from a consumer’s bank account on the due date. This reduces the chances of defaults and imposition of late fee hassles.

6. Auto Charging

As stated above, BNPL installments are automatically deducted from the consumer’s bank account on the due date. This means, consumers don’t need to visit their bank branch or use online banking to make the repayment every time the due date approaches. 

Cons Of Using Buy Now Pay Later

Every pro comes with its own list of cons. Listed below are some disadvantages of using BNPL as a financing option. 

1. Overspending And Impulse Purchases

One of the primary disadvantages of BNPL is impulse purchase and overspending. The option gives consumers the leverage to convert large amounts of payments into smaller EMIs, easing some pressure off their pockets upfront. 

However, it also engulfs them in to the desire to spend money on commodities that they don’t want. Shopaholism might kick in, making them spend more than they can afford.  

2. Interest Fees And Late Payment Penalties

While most Buy Now, Pay Later service providers offer interest-free services to its customers, they do charge an interest on late or missed payments and insufficient funds. In most cases, a late fee is charged on a daily basis until a consumer has enough money in their account to make the scheduled payment(s). 

Note, Buy Now Pay Later interest rates are quite high, even higher than what most credit card companies charge. This means, if a consumer misses even one payment, they’ll end up paying more in terms of interest or late fee than the item’s actual cost.

3. Rigid Payment Schedules

Another disadvantage of using Buy Now Pay Later as a payment option is that the service providers decide on the auto debit dates. This means, the consumer, 

• Constantly needs to maintain cash in their account to avoid defaults
• Can’t work around paydays to ensure all auto debits happen within a span of 2-3 days  

The only way BNPL works to their advantage is when they have a grip on their financials as well as know exactly on what date which payment will gets auto-debited from their accounts. 

4. Possibility of Bad Credit Score

Although Buy Now Pay Later doesn’t help build a consumer’s credit score, it surely affects one in the case of a late or missed payment. Every defaulted payment is reported to the credit bureau which is then added to the user’s credit record. 

Plus, some BNPL service providers also conduct a soft credit check, such as gathering information from a consumer’s PAN or Aadhar during KYC. Too many soft enquiries can also affect a consumer’s credit score. 

5. No Additional Perks 

Unlike many credit cards that usually offer perks on every purchase a consumer makes, such as a cash back, a discount coupon, etc. BNPL offers no such benefits. Additionally, paying bills in full at the end of the month using a credit card also guarantees that a consumer will be able to avoid any additional interest on any of their purchases. 

6. Possibly Lower Ability to Get Other Loans

Since Buy Now Pay Later has the ability to affect a consumer’s credit score (as stated above) this means they may also face problems while applying for a loan in the future. How a consumer uses BNPL as a payment platform and the limits on their past and current accounts play a significant role in approving or rejecting their application for a type of loan. 

Buy Now Pay Later From A Merchant’s Point-of-view 

Buy Now Pay Later is an excellent payment model for retailers as well. It enables retailers to convert high value items into affordable ones for customers and record a high conversion rate. However, Buy Now Pay Later does pose some shortcomings as well. Let’s take a look at the pros and cons of BNPL for retailers.

Pros Of Using Buy Now Pay Later 

Listed below are some benefits that Buy Now Pay Later extends to retailers. 

1. Higher conversion rate

According to Baymard, nearly 69.82% of online shoppers abandoned their cart in 2021. While there are a plethora of reasons behind a customer leaving the site without making the purchase, nearly 7% of people do it because of lack of right payment options available at their dispose or financial crisis. 

Here Buy Now Pay Later helps merchants enable consumers to buy commodities of their choice in both the defined conditions. It also allows consumers to take advantage of the ongoing sale and promotional discounts on a merchant’s site while paying using BNPL. This, in turn, helps a merchant bag high conversion and low abandonment rate. 

2. Wider Audience

By splitting purchase amount into smaller monthly installments, merchants, with the help of BNPL, make big purchase shopping a lot more affordable for the consumers. For instance, a consumer can now plan to buy an iPhone 13 Pro valued at INR 1,19,000 without thinking twice using the BNPL payment option at various merchant locations, both online and offline stores. 

This also means merchants can reach a wider range of audience, including the budget-constraint class. 

3. Higher Average Order Value

The average order value (AOV) refers to the average amount paid by a consumer when making a purchase on an online platform. After introducing Buy Now Pay Later as a payment option on their platform, many online retailers have experienced an increase in their AOV as high as 130%.  

The reason? Smaller and spread-out payments have enhanced a consumer’s purchasing power. It has given rise to the ‘I want a product and I want it now’ philosophy amidst consumers which, in turn, means more sales for the retailers. 

4. Improved customer experience

A positive customer experience means high retail conversion rate. Customers are happier when they’re given autonomous control over their purchases. By giving such flexibility and financial options, merchants empower consumers and hence, receive excellent customer reviews and higher conversion rate.   

Cons Of Using Buy Now Pay Later

Just like any other payment mode, the “Buy Now, Pay Later” scheme also comes with its list of drawbacks. Below are some of them from a retailer’s point of view:

1. Higher merchant fees

Most Buy Now Pay Later service providers operating in the Indian market are currently charging a nominal amount per transaction to both the customers and the merchants. However, compared to traditional modes of payments, Buy Now Pay Later charges are high. They usually range between 2% and 6% of the total purchase amount.

Cashfree Payments is among a handful of payment gateway service providers that levies the lowest per transaction charge.  

2. Integration Challenges

Integrating Buy Now Pay Later as a payment option involves some workaround. In most cases, it demands specialised tools and technology, which often add to the expense incurred by the retailer. Many financial experts recommend going with third-party BNPL service providers such as Cashfree Payments, as they not only serve as a cheaper alternative but offer many other payment options as well to merchants. 

3. Accreditation Challenges

Besides the integration challenges, Buy Now Pay Later may not be a suitable option for all types of online businesses. Merchants have to meet certain requirements to start offering Buy Now Pay Later to their target audience. Moreover, businesses selling tobacco products or gaming companies are not eligible to offer the BNPL option to their customers. 

4. Encourages Consumer Debt 

Another drawback of Buy Now Pay Later is that they often encourage consumers to buy more commodities than they can afford. This can put consumers into jeopardy, affect their credit scores in the case of late or missed payments, and cause merchants loss of business in the long run.

Choosing Buy Now Pay Later Service Provider: What All To Consider?

Although the services rendered by most Buy Now Pay Later providers are more or less the same, here are some parameters to consider when choosing a BNPL partner. 

1. Protection 

Protection is paramount. So, when selecting a Buy Now Pay Later service provider ensure they’re a certified lender. If they’re not RBI certified then they must certify under whose license they are offering the services. In case they are, check if they’ve mentioned the same on their app and website.

Secondly, check some basic details about the company such as:

• Date of establishment
• Indian or foreign registered company
• Number of customers 
• Social proofing

Thirdly, most BNPL options claim no fees or zero interest, but, as a merchant, you need to understand what is the real cost involved. Even if companies say zero per cent onboarding charges or no annual fee, they are supposed to declare their IRR – Internal Rate of Return, so the merchants, for their own protection, need to make sure that the company or the app is disclosing all of these.

2. Compatibility 

Chose a Buy Now Pay Later service provider that’s popular in the marketplace. This increases the chances of authenticity. Also, conduct a multi-level check before onboarding a BNPL service provider. 

3. Commission 

While most Buy Now Pay Later service providers claim to not charge any interest, there’s no harm in reading between the lines. Even if the company says zero percent, check their IRR (interest rate of return) for your own protection. 

Shift Of Traditional Banks Towards Buy Now Pay Later Model In India

Buy Now Pay Later is one of the latest emerging lending technology sectors in India. Several Buy Now Pay Later startups as well as well-established Fintechs are working their way around and testing new strategies to make this payment technique the new, widely used payment mode in the nation. Moreover, eCommerce marketplaces such as Flipkart and Amazon India have also ventured into this new payment territory. 

For instance, Simpl is working with approximately 2500 merchants and has a customer base of about 7 million people. It registers a compound annual growth rate of nearly 36%. According to sources, the Indian Buy Now Pay Later sector is expected to touch USD 50 billion by the end of FY 2026. This indicates just how much people inclined towards the lending platform even during its infant years.

Ola, one of the leading ride-hailing aggregators of India has also entered the BNPL arena and is offering Ola Postpaid services to its customers. The service enables users to pay-later on 300+ third-party platforms including their own. 

While startups are leading the flame of adoption, traditional banks are holding back from venturing into the territory of Buy Now Pay Later payments. They fear that this might cannibalise their lucrative credit card business in some or the other way. 

However, some banks believe that credit cards and Buy Now Pay Later can coexist and complement each other in many ways. Banks are using BNPL to get a new set of consumers onboard that resisted credit cards. 

For instance, ICICI Bank offers in-store pay later facilities to its customers. This allows users to purchase high-value items and split the amount into smaller payment portions. Moreover, the bank is offering a no-cost loan product that, in turn, eases onboarding and reduces much paperwork as in the case of credit cards.

Similarly, HDFC Bank launched its FlexiPay scheme in 2018. It offers zero interest credit for upto 15 days with a maximum credit limit of about INR 60,000. The bank has partnered with many online retail platforms such as Myntra, Bata, OLA, MakeMyTrip, Lakme Salon, Urban Company, CureFit, etc. to extend its Buy Now Pay Later services.

Besides online retail shop owners, brick-and-mortar merchants can opt to offer BNPL EMIs at their stores via POS device providers. At present, BNPL is helping many small and medium-sized brick-and-mortar businesses recover from damage done by COVID-19 pandemic and increase sales.

The launch of Flipkart Pay Later and Amazon Pay Later also boosted the sales of the two platforms respectively, especially during the festive season sales. In 2020, Flipkart officials stated that EMI options and pay later were the highlights of their sales. Flipkar witnessed a 7x higher spend via pay later option along with 1.7x higher adoption of EMI schemes. The numbers are equally staggering for Amazon Pay Later. 

Buy Now Pay Later Examples From Different Industries

eCommerce Industry 

Even though multiple industrial segments are now offering Buy Now Pay Later services to their customers, it’s the eCommerce that’s expected to drive maximum growth. 

In 2020 alone, BNPL accounted for about 2.1% of the world’s total eCommerce transactions according to the Global Payments Report published by FIS in 2021. This figure is expected to double by the end of FY 2024 with Buy Now Pay Later holding 4.2% share in the total global eCommerce sales. 

While the concept of Buy Now Pay Later is also quite popular in the APAC and Americas, particularly in Australia, New Zealand, and the United States, it’s gaining much momentum in the Indian region now. The number of payment service providers and Fintechs offering BNPL services are increasing at an exponential rate. 

For instance, founded in 2015, LazyPay is one of the fastest growing Buy Now Pay Later service providers in India. At present, it caters to more than 3 million Indians and can be used on over 25000 plus eCommerce sites. Simpl, ePayLater, ZestMoney, and Capital Float are other emerging Buy Now Pay Later platforms that are boosting eCommerce businesses and helping them increase their retention and conversion rate.  

At the current pace, India is expected to clock about USD 50 billion by the end of FY 2026, a major chunk of which will be from the eCommerce industry.  

Food And Beverage Industry

The Indian online food delivery industry is booming at an exponential rate. The outbreak of the COVID-19 pandemic has further added to the industry’s rapid resonance. In 2020, the industry registered a revenue of about USD 4.35 billion and is expected to grow at a CAGR of 30.1% between 2021 and 2026. 

Much of this revenue comes from food delivery giants such as Swiggy, FoodPanda, FreshMenu and Zomato, especially in the metro cities of India. More so, according to Redseer, almost 75% of all the online food delivery is hosted by third-party companies. Looking at the industry’s growth rate, Buy Now Pay Later service providers such as ePayLater, Simpl, LazyPay, etc. are entering the segment and enabling merchants to offer credit to customers.  

Here’s how it works:

1. Download a Fintech’s app that offers the Buy Now Pay Later option. 
2. Provide the necessary business details
3. Register on the platform as a merchant
4. Do a simple e-KYC, if asked/necessary
5. Add business bank account details to receive money
6. Start offering BNPL as a payment option to consumer

With more and more people opting for food delivery services and getting comfortable with the pay later concept, it won’t be a surprise to see a rapid surge in the revenue that Buy Now Pay Later will register with this very segment. 

Brick-And-Mortar Stores

While there has been an absolute surge in the number of people shopping for commodities online, there remains a part of the Indian society that still opts for in-store shopping. According to a survey carried out by YouGov, shoppers in India bought more essentials by physically visiting brick-and-mortar stores and made discretionary purchases online in 2021.

Consumers prefer to shop for essential goods such as fresh fruits and vegetables, beverages, and medical supplies in store, while purchasing clothes, footwear, cosmetics, gadgets and gizmos online.

Here’s a comparative analysis of commodities bought online and offline by Indian consumers in 2021. 

Attributes like home delivery, easy return policy, and faster refund processing are some of the primary reasons why consumers are preferring online shopping than physical stores. However, POS (point-of-sale) lending is increasingly making things easier for buyers at the brick-and-mortar stores. Companies like LAzyPay and Kissht in the Buy Now Pay Later EMI segment are offering online POS lending services to brick-and-mortar merchants who are, in turn, helping buyers to leverage “scan now, pay later” services of these companies. 

As of 2021, there has been a significant increase in footfall at brick-and-mortar stores, especially in the Tier I and Tier II cities after the introduction of the Buy Now Pay Later payment option. Despite the pandemic causing a major financial crisis in the lives of many Indians, BNPL is enabling them to live their lives normally and stay financially stable.

Education

The rise in the penetration of the internet in Indian households and easy access to innovative technologies had already set a platform of growth for the education sector pre-pandemic. COVID-19 just helped accelerator this growth. After the United States, India stands as the second-largest market for e-learning platforms. 

Probably the reason why companies like Byju’s, Unacademy, Udemy, etc. are flourishing at such a pace. Moreso, the industry is touted to touch USD1.96 billion by the end of 2021 and showcase a further growth of USD 2.28 billion between 2021 and 2025. 

However, the pandemic also highlighted many inefficiencies of the online education system. For instance, students hailing from low-income backgrounds cannot afford a device to access the online learning classes. Many others cannot afford to even register for online classes due to financial constraints. 

The Buy Now Pay Later business model is serving a solution to such challenges. It’s helping,

• Online education platforms onboard more students
• Students to access better education services even during financial crisis

Leading education institutions and Edtechs are increasingly collaborating with Fintechs to offer flexible payment solutions like BNPL to students and their parents to avail both online and offline courses. Rather than asking for fees in lump-sum, institutions are now enabling students to pay course fees in smaller, more convenient installments at zero interest. 

Top Buy Now Pay Later Service Providers In India

While the COVID-19 pandemic has brought many hardships to the global population, it has in fact, also helped them explore new avenues that most believed were roads inaccessible to humans. Buy Now, Pay Later is one such concept that’s unearthed it’s true potential during the pandemic.

Many Fintechs and other financial institutions are leveraging the technology and have built empires solving the cash-crunch problems of millions of individuals. At present, there are only a handful of companies offering BNPL services in India. However, the numbers are expected to significantly increase in the coming half a decade.

Here’s a list of some top Buy Now Pay Later players operating in India. 

Simpl

At present, Simpl tops the list of major challengers operating in the BNPL payment segment in India. Established in 2015, it’s a full-stack, mobile-first Buy Now Pay Later platform that offers on-the-spot credit facility to individuals and empowers merchants with higher conversion rate. 

As of date, Simpl has:

• 7 million active users
• Has processed over 49 million transactions 
• Available across 10,000 plus merchants  

For users, Simpl offers the following benefits,

• One-tap payment process
• Current limit offered INR 20,000
• Access to consolidated view of expenses 
• Easy 15-day repayment option
• Zero-interest per transaction 

From a merchant’s point of view, Simpl offers the following benefits,

• Seamless integration across various platforms 
• 2x increase in customer retention frequency
• Zero percent transaction failure rate
• 20% growth in basket size 

The Buy Now Pay Later platform has raised USD 71.7 million in funds till date from many leading global investment firms including IA Ventures, Green Visor Capital and Valar Ventures. Simpl also saw an uptick in its daily essential transactions in 2021 by almost 50% as compared to the pre-Covid times through online orders. It also registered a 1.5x increase in its average ticket size in 2020.

ZestMoney

After Simpl, ZestMoney is touted as one of the fastest growing pay-later Fintechs in India. Founded in 2015, the company enables users to easily shop online and offline, and pay later in 3 or 4 bite-sized installments at zero percent interest. 

Contrary to its counterparts, Zestmoney makes use of mobile technology, digital banking system, and artificial intelligence (AI) to provide access to funds to individuals who otherwise cannot get loans through traditional mediums.

With ZestMoney, individuals get the following benefits 

• No joining fees and no hidden charges
• Simple account creation and KYC process 
• Interest-free installment option with select merchants for upto 6 months of tenure
• Zero percent processing charges
• Personalized credit limit of up to INR 2,00,000
• Accepted across 10,000 online and 75,000 brick-and-mortar stores
• Pay for big-ticket purchases such as flights, furniture, etc.  

As of date, ZestMoney has approximately 11 million active customers and is available across 2,50,000 merchants. It has also raised USD 118.4 million in funding till date and is backed by many leading investors including Goldman Sachs, Omidyar Network, Naspers, and Coinbase. 

In 2020, ZestMoney registered an approximate growth of 50% in the average ticket size of Edtech transactions, 30% and 15% in the case of personal loans and e-commerce respectively.

LazyPay

Consider LazyPay as a strategic amalgamation of services offered by Simpl and ZestMoney. Users can use LazyPay to easily shop online and clear their dues either every 15 days or convert the entire amount into no-cost equated monthly installments. 

Listed below are some other benefits offered by the pay-later startup,

• One-tap payment processing
• Settle accounts via affordable Instalment plans
• Personalized credit limit of up to INR 1,00,000
• Accepted across 25,000 online merchants 
• Pay for big-ticket purchases upto available credit limit  
• Paperless credit disbursal with 100% digital process

As of date, LazyPay has processed approximately USD 1 million plus transactions, disbursed over USD 500 million in credit, and has nearly 4 million active users.

In 2021, Lazypay saw an increased demand for travel, entertainment, and food & beverage sectors, showcasing a growth of over 300% compared to 2020. It also saw an uptick of about 70% in customer acquisition in 2021. 

Flexmoney

Operating as InstaCred, Flexmoney offers a 360 degree instant cardless credit platform to the Indian audience. The Fintech enables trusted banks and lenders to easily offer lender-branded, instant credit options across a network of online platforms.  

Flexmoney offers flexible payment options similar to LazyPay. Users can choose between paying full amount or convert it into equated monthly installments. However, the startup does not disburse any finance from its own pocket. Rather, it enables banks and lenders to use it’s platform to reach a wider audience and offer Buy Now Pay Later services.  

Flexmoney is used by 10,000 plus merchants in India. Moreover, it has partnered with 6 major lenders that have processed over 25 million plus pre-approved ‘cardless’ EMI credit lines till date. Incorporated in 2015, the firm has bagged USD 351 million in funding in India.

ePayLater

Another Fintech established in 2015, ePayLater too offers an instant line of credit to the Indian population to make online and offline purchases. 

With ePayLater, consumers avail the following benefits.

• One-tap checkout process
• Access to credit line between INR 25,000 and INR 25,00,000 
• Access to consolidated view of expenses 
• Easy 14-day repayment option
• Zero-interest per transaction 
• Access to a wide range of commodities 

The Buy Now Pay Later Fintech has disbursed approximately USD 89.8 million in credit line since 2017 in the food and groceries retail segment alone. It has also raised USD 15.7 million in funding to date. ePayLater is now planning to make an entry into the B2B and small-and-medium enterprises (SMEs) lending segment. 

Conclusion

The Buy Now Pay Later or BNPL payment sector may be currently in its nascent stage in India. However, it’s touted to be the next big thing disrupting the entire payment industry. More and more Fintech companies along with NBFCs are developing state-of-the-art Buy Now Pay Later products to cater to the increasing cash-crunch-management needs of the Indian population. 

Many payment firms are also planning to expand their product portfolios in this very segment. And why not! The segment is proving to be a win-win proposition for everyone including the lenders and the consumers. 

Frequently Asked Questions