The traditional way of shopping involves either paying the full amount upfront in cash or a credit card. But with the rise of Buy Now, Pay Later (BNPL) services, young consumers in India have a new option when it comes to financing their purchases. In this blog, we'll explore how BNPL services are revolutionizing the way young consumers shop in India.
How does BNPL work?
BNPL services work by partnering with retailers and e-commerce platforms to offer their payment options at the checkout. The customer selects the BNPL option and fills out a short application form with their personal and financial details. The BNPL provider then conducts a quick credit check to assess the customer's creditworthiness.
If the customer is approved, they can proceed with the purchase and pay for it in instalments. The customer can usually choose the number of instalments and the frequency of payments. The BNPL provider charges interest on the outstanding balance, which varies depending on the provider and the customer's creditworthiness.
The Rise of BNPL in India
BNPL services have been around for a while in India, but they've seen significant growth in recent years. According to a report by RedSeer, the Indian BNPL market is expected to reach $4.4 billion by 2024, growing at a CAGR of 65%. The report also suggests that BNPL services will account for 9% of e-commerce transactions by 2024.
The popularity of BNPL services in India can be attributed to several factors:
They offer a convenient and flexible payment option for young consumers who may not have access to traditional credit.
They allow consumers to spread the cost of their purchases over several instalments, making them more affordable.
BNPL services often have lower interest rates than credit cards, making them a more attractive option for young consumers.
Future of BNPL in India
The future of BNPL in India looks promising. Recently, we have seen an increase in the number of BNPL providers and the number of retailers and e-commerce platforms that offer BNPL services as a payment option. As more customers choose to use BNPL to finance their purchases, the trend is probably going to persist in the upcoming years.
One of the reasons why BNPL is so popular in India is that it offers an alternative to traditional credit cards. Young consumers do not widely use credit cards. The use of BNPL services provides a simple and convenient alternative to using a credit card for purchases.
Another factor driving the growth of BNPL in India is the increase in e-commerce sales. As more people shop online, they are looking for flexible and convenient payment options that fit their budgets. BNPL services offer just that, making online shopping more accessible and affordable for young consumers.
In addition, the COVID-19 pandemic has accelerated the adoption of digital payment methods in India. As more people have been forced to stay at home and shop online, they have become more comfortable with digital payments. BNPL services are a natural fit for this trend, as they offer a seamless and contactless payment option that can be used for online purchases.
However, it's important to note that with the growth of BNPL services, there is also a risk of overspending and accumulating debt. Providers and retailers need to ensure that customers are using BNPL services responsibly and not getting in over their heads. Consumers should also be aware of the risks and use BNPL services carefully to avoid falling into debt.
Wrapping It Up
To conclude, the future of BNPL in India is bright. With its convenience, flexibility, and accessibility, BNPL is well-positioned to become a popular payment option for young consumers in India. As the market continues to grow, we can expect to see more innovation and partnerships in the space, as well as an increased focus on responsible use and risk management.
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