Brought about by the pandemic, the paradigm shifts in how people carry out regular day-to-day activities translated into a major boost in the country’s digital economy. As more and more people moved towards online culture, the pandemic turned out to be a blessing in disguise for some tech & retail companies. However, on the other hand, there came a huge wave of layoffs and business shutdowns that affected the lives of millions. The worst affected were millennials and GenZ–left with little savings and limited borrowing options. This paved the way for Buy Now Pay Later apps amongst millennials and GenZ, helping them boost their budget with extra credit.
What is BNPL and How it Works?
Buy Now Pay Later is a payment method that enables you to shop for whatever you need now and pay for it later. BNPL somewhat works like a small-ticket loan or a credit line but is simpler to use, easier to get, and is not fraught with tricky terms and conditions. BNPL offers interest-free credit and extends your monthly budget in no time. The main reason behind the popularity of BNPL is that it doesn’t require the borrower to have a formal credit history. However, once you have taken BNPL credit, your spending and repayment behaviour do affect your CIBIL score.
When you choose a BNPL provider, it requires you to complete KYC formalities and provide certain details. Upon successfully signing up, you’re allotted a credit limit that you can use to shop or pay bills. To use your BNPL credit, all you need to do is select the BNPL option on the checkout page and complete the transaction. For all your spending during a cycle, a consolidated bill is generated which you need to settle by the due date. The average interest-free period offered by most lenders varies between 30 to 45 days.
Why does BNPL appeal to customers?
Apart from other major breakthroughs in the fintech space, BNPL has disrupted the whole flexible payment landscape in the last couple of years. The most popular BNPL players today have been in the market for quite a long time but they just did not seem much attractive before the pandemic. With all the behavioural and lifestyle changes, flexibility, convenience, and security have become the drivers of change in the fintech space. And clearly, BNPL fits pretty well in this aspect–catering to the very need of anyone and everyone looking for a flexible payment option.
With no hard requirement of long credit history, BNPL is easily accessible to all. For millennials and GenZ, BNPL was thus the go-to choice. From utility and food bills to grocery and fashion shopping, BNPL credit helped them boost their purchasing power and fulfil essential needs. Moreover, the fact that BNPL is a small-ticket loan, assures millennials that they are not at the risk of taking too much debt. Repaying BNPL credit is thus easy, and it also indirectly helps millennials and GenZ borrowers in building their credit score.
How is BNPL Projected to Grow?
The trend of online shopping has gained speed in the past few years and this, in turn, has boosted the growth and popularity of BNPL apps. In view of this, here’s what we can expect in the near future.
New Partnerships
As BNPL continues to grow, retail businesses have started realizing how payment convenience can help them attract and retain more customers. Therefore, within the next few years or less, it is highly possible and predicted that all online shopping platforms will become BNPL-enabled.
New Developments
With the increasing popularity of BNPL, it is expected that its scope will expand beyond retail businesses and consumers. Some BNPL providers are actively working on innovating the product for B2B purchases. Apart from this, some industry experts believe that soon we might as well see BNPL credit being offered in the form of cryptocurrencies.
New Value-Added Services
The rising number of BNPL customers is an indirect pressure on BNPL providers to offer more unique services to attract new borrowers. With this, many have already started providing exclusive offers in partnership with popular consumer brands. For instance, Freecharge Pay Later provides its customers with exclusive cashback offers on Zomato, Bigbasket, Myntra, JioMart, and more. Soon, BNPL providers are expected to introduce more benefits like loyalty points and more.
Summing Up
There’s a lot happening in the fintech space and BNPL has a lot of scope for expansion. Given its easy accessibility, the social impact of BNPL is also remarkable–making waves in tier-II and tier-III cities of the country. In the future, the competition amongst BNPL players is set to become fiercer as more and more financial players are joining the market with innovative solutions and services.
Meanwhile, if you’re looking for an overall perfect BNPL app, we recommend trying Freecharge Pay Later. It allows you to pay with just a tap at 40,000+ stores (both online and offline) and offers instant credit. In addition, you regularly get to enjoy exclusive cashback offers on top brands.
