Inside This Article
The data speaks for itself! Buy Now, Pay Later (BNPL) solutions are predicted to reach 20527.234 billion Rupees in revenue by 2025, expanding at a rate of 40% annually.
People started paying more with their own money because they didn’t want to take on debt during uncertain economic times.
But there are a lot of comforts that are driving the buzz surrounding BNPL’s ascent to power. The entire retail lending business is reforming.
As more people use digital tools, banks and NBFCs have to change how they work and find easier ways to help their customers.
With more people using online shopping, banks need to act fast and give customers better, more personal digital services.
What is Buy Now Pay Later?
Do you buy stuff from online sites like Amazon and Flipkart? If so, you must have noticed the “Buy Now Pay Later” (BNPL) option when making your payments. If you haven’t used it, you probably have many questions. What is this option, who is it for, what are its advantages, and should you choose this option?
With this kind of payment, you can buy things even if you are short on cash. Let’s say Shreya plans to spend Rs 10,000 on a mobile phone on September 15. However, she has a small amount of money in her bank account and does not hold any credit cards either.
In such a situation, she is unable to buy a cell phone. The “Buy Now Pay Later” concept is the answer to this issue. Shreya can buy the phone with the help of this option. She can return the money or have it converted into EMI when her salary is sent into her account at the end of this month.
Finance companies or NBFCs provide you with a short-term loan in the form of Buy Now Pay Later. Shreya will not have to pay any interest if she returns the money on October 5 (the payment due date) after purchasing the phone on September 15.
Finance companies provide loans for purchases in this manner through this facility. This service is useful for people who do not have a credit card and need to purchase something quickly. Like when your phone breaks down unexpectedly, you may have to buy a new one because many of your tasks will be halted.
Buy Now Pay Later’ an Impact on Customer’s Shopping Journey.
BNPL allows consumers to keep shopping despite having credit at the time of purchase. This solution has a significant role in the decision process; it already provides customers with a time frame they did not have.
This option may even inspire the consumer to buy more because they will only have to spend a few weeks or months later.
BNPL fintech companies and NBFCs use smart online marketing and make the customer experience more personal. They offer things like bucket lists, reminders, and special deals to keep users interested.
Read Article: Fintech Regulatory Compliance: 2025 Guide
BNPL shows a revolution in the consumer journey and has the potential to go beyond simple loans. This model provides a more equal and fair platform for consumer expenditure than credit and debit cards.
Research shows customers will use BNPL tools to make approximately 919 billion dollars in retail spending this year.
The BNPL has two main plans. It helps young people who don’t want credit cards and older people who can shop now and pay later, with no credit check.
Need for Regulations for Buy Now Pay Later
However, there is a downside: this idea hasn’t been fully controlled and can lead to more debt for customers because the product terms aren’t clear.
The main drawback for short-term debt holders, for example, is how they can evaluate the cost of debt that customers incur.
Banks, both government and private, are worried that Buy Now Pay Later could take money away from other sources, like credit and debit cards.
The review says that unchecked financial plans make people spend more than they can afford.
Experts say these solutions don’t give customers enough time to understand them, which could lead to more people getting into debt.
Buy Now Pay Later’ vs credit cards?
The primary benefit of the “Buy now pay later” option is that it offers a one-click credit facility at the point of purchase on retailer web and mobile. One can use this quick credit option from BNPL to make immediate transactions and settle back later.
1. Pricing strategy that is open and affordable:
BNPL uses a pricing strategy that is fair and affordable. Many deals are supported by manufacturers to give customers the best value.
2. Rapid sign-up and entirely digitized process:
Anybody living in any location across the nation is welcome to sign up and use the platform. On the other hand, credit cards need weeks and a tonne of documentation, and one can quickly get accepted and begin transacting with online KYC.
3. Quite Reachable:
Credit cards are considered for individuals with high credit scores, those living in major cities, and those who earn a salary. In India, only Three crore people use credit cards.
Buy Now Pay Later’ is made for a bigger group of people, including those who’ve never used credit or have a short credit history
Most BNPL providers use a special formula and data to accept these customers. Also, more people in India are switching from credit cards to BNPL.
4. BNPL companies or credit cards with a higher interest rate:
Credit cards are perhaps the most popular type of credit, as is common knowledge. Missing payments can lead to interest rates as high as 48%. However, BNPL companies usually charge between 0% and 24% interest, depending on the store, payment time, and customer.
Red Flag: Thing to Remember before using ‘Buy Now Pay Later’
Even though BNPL has many benefits, experts say people should be careful when using it.
Late fees can be different for each lender, but they are usually charged once and don’t grow over time like credit card interest. It is crucial to remember that BNPL is still fundamentally a loan, so, BNPL providers may record a borrower’s repayment history to credit bureaus.
Read Article: How Fintech Startups Can Partner with Credit Bureaus for Growth
Experts say most BNPL companies report payments to credit bureaus. So, customers still need to pay on time to keep a good credit score, just like with other loans.
Conclusion: Should I Buy with ‘Buy Now Pay Later’?
Well, really. The ideal approach to pay for your orders is in full at the time of making them. But BNPL can be a fantastic choice if you do need to finance a transaction.
To avoid late fees and interest, it’s best to pay the full amount. If you can’t afford something right away, try saving money every week or month until you have enough to buy it without using credit.
Short repayment terms and interest-free deals from BNPL reduces interest cost and keep you from accruing debt. You must, however, confirm that you can afford the agreed-upon payment plan to protect your savings account and your credit score.
📞 Call NBFC Advisory: +91 93287 18979
🌐 Visit: nbfcadvisory.com
