How ‘Buy Now, Pay Later Model’ Is Changing Consumer Shopping Habits In India

Martine Coven


With increased digitization and the evolution of technology, more and more people are shopping online. The Covid 19 has only added to this development significantly. Thus, there is a boom in the e-commerce industry. At one time, credit cards were often preferred for deferred payment. But, now more and more e-commerce websites and startups, such as Amazon and Flipkart offer BNPL options. This facilitates the users to buy the goods in advance and pay for them later. Buy-now-pay-later – or BNPL gives instant access to credit for customers. This credit is interest-free for a certain duration and can be paid off in installments. But, companies charge penalties if the credit is not repaid by the due date. Let us now understand how the ‘Buy Now, Pay Later Model’ is changing consumer shopping habits in India.

What Is BNPL Exactly?

‘Buy Now, Pay Later’ (BNPL) is a kind of short-term credit that allows you to make purchases and pay in installments for your purchases by the end of a certain time period.

How India’s Purchase behavior has changed

India’s Buy now, pay later industry is expanding largely. According to Economic Times research, India’s BNPL market is expected to grow to $45 to 50 billion by 2026 and from $3 to $3.5 billion currently.

  • Since the Covid 19 pandemic, many customers have shown a preference for contactless shopping.
  • It is not just consumers who do not want to pay cash, but also e-commerce store owners are not willing to handle cash. Thus, they have come up with offers encouraging digital transactions rather than cash on delivery.
  • People can get a feel of real-time shopping through these digital platforms. Festive seasons are still abuzz with gifting and we are heading towards a new trend of digital gifting.
  • During the festive seasons, BNPL options came out along with traditional digital payment methods. With features like access to instant credit, a faster and safer checkout process, and immediate refunds, more and more people opt for BNPL.
  • A large number of BNPL users are millennials and Gen Z. The next generation is probably going to rule the future of BNPL. Due to the simplicity and convenience of using this mode of payment, millennials and Gen z people will prefer using BNPL. This is known as demographics-related popularity.

What Are The Advantages of BNPL?

  • BNPL is interest-free: For many consumers, zero interest for a limited period is the most attractive feature that makes them choose this payment mode. They don’t have to rely on credit cards with high-interest rates anymore.
  • Instant access to microcredit: BNPL provides instant access to credit at the point of sale. This makes shopping easy and quick.
  • Quick Processing:  There is no paperwork or documentation. Credit is approved in real-time. Consumers do not have to wait for weeks and months for approval and the probability of refusal is low as compared to credit cards or personal loans.  
  •  BNPL platforms are safe with security encryptions, thus safeguarding customers from cyberattacks.
  • Easy eligibility criteria: BNPL services do not have strict eligibility criteria. Thus, even people with no credit history or credit score can avail of this credit service.
  • Flexibility: payments can be made in a flexible manner regardless of the value of the goods. This flexibility makes consumers opt for BNPL as they don’t need a credit card to enable the purchase due to a lack of funds.
  • Zero cost: BNPL service is absolutely free. The service provider does not charge the consumer with any fee. However, interest is charged if you do not pay by the due date, but this is fixed or very minuscule.
  • Transparency: Credit cards have hidden fees, whereas BNPL models are more transparent regarding their charges and upfront with payment terms. This reduces the doubt and apprehension regarding the total charges.
  • BNPL is simple to use: BNPL enables a very simple one-time checkout. When people make payments through credit cards, UPI, and bank transfers, they may have to face some hassles. With immediate refunds, rapid and easy checkout, the absence of OTP, and nil failure,  customers opt for BNPL.
  • Decreases the chances of cart abandonment: BNPL reduces cart abandonment greatly.  According to the survey by Baymard Institute, it is found that almost 6% of cart abandonments occur due to a lack of payment options.
  • Empowers the customer: You can test the product without committing to the purchase. You can even return the product if it is not fine or you don’t like it.

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BNPL is a really popular service that is convenient and easy to use. It has several advantages that attract customers. It is good for customers and retailers. Consumers can purchase even if they have a credit crunch. The customer experience is also frictionless. For retailers, they get new customers, can get increased value for sales, and customer loyalty improves. Thus, BNPL is a very convenient option and is growing in popularity. The ‘Buy Now, Pay Later Model’ Is Changing Consumer Shopping Habits In India


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