Is “Buy Now, Pay Later” the Future of Lending in India


According to data from a recent survey, “The Future of Financial Services Report”, India leads the world in its intention to use “Buy Now, Pay Later” services in the future.

Pandemic-induced economic changes have driven consumers to shop online. People have turned to the internet to order groceries, clothes and other essentials. Buy Now Pay Later (BNPL) has become more than just a payment mechanism; it essentially reduced borrowers’ financial stress by offering EMIs at no cost.

In addition, the symbiotic link between e-commerce and the BNPL has a bright future. According to Goldman Sachs, Indian e-commerce is expected to become a $99 billion market by 2024, driven by consumer demand. At the same time, BNPL will become the fastest growing online payment method, growing from 3% in 2020 to 9% in 2024.

How common is BNPL as a payment method?

Buy now pay later (BNPL) is an emerging lending technology sector in India due to the advent of e-commerce and digital payments, and a rapid rise in the number of Fintechs. Additionally, due to the ease of access to credit, BNPL is the most popular product among GenZ consumers, young Millennials, and first-time borrowers, who are often overlooked or overlooked by traditional banks.

According to a survey, the Indian BNPL market will reach $45-50 billion by 2026, from $3-3.5 billion today. According to the research agency, the number of BNPL users in the country could increase to 80-100 million by then, from 10-15 million currently.

This has prompted more companies to enter the Buy Now Pay Later (BNPL) market. In India, there are about a dozen BNPL players. Traditional banks are also joining the BNPL movement by collaborating with new age Fintechs.

Is BNPL a better option than credit cards?

Digital natives and tech-savvy customers, Millennials and Generation Z, are increasingly turning to the concept of microloan and are now purchasing paid later services for a more seamless user and merchant experience.

Credit cards have been around for decades and have gradually but surely found their way into the internet shopping ecosystem. Documentation difficulties, credit score requirements, numerous identification series, etc., on the other hand, cost time and effort.

BNPL has stepped up its efforts to remove these sticking points as Millennials and Gen Z lose patience with traditional red tape and demand for flexibility and transparency increases.

Is the BNPL the future of credit?

The credit industry in India is simply too big for any single individual or sector to service. The BNPL will not replace traditional credit, but it will be able to enhance it in two ways, thanks to the power of collaboration.

For starters, BNPL has the potential to provide loans to a credit-starved economy like India. BNPL loans, unlike traditional credit, are mainly used to make online purchases or pay utility bills. Thanks to this combination, they are quickly becoming a standard type of online transactions.

This is rapidly changing the perception of BNPL from a lending instrument to a lifestyle symbol that allows individuals to buy the products they want at a reasonable price. BNPL will bring the next billion into the official financial fold. Since the vast majority of BNPL borrowers are new to credit, BNPL paves the way for them to improve their credit rating and enter the formal financial market, thereby improving financial inclusion in the country.

Traditional financial institutions can also use this credit history data to build a deeper and more efficient credit risk assessment model. This will facilitate access for people who have been denied credit.


The BNPL has become more than a credit instrument; it has become a way of life. It will soon become the main driver of credit expansion in India. The BNPL revolution in India is just beginning; it will change the face of credit in the country over time.

Moreover, as smartphones and internet connectivity spread across India, the reach of BNPL payment providers is only expected to grow.

According to a report by Redseer Consulting, the BNPL segment is growing 65% year-on-year. By 2025, it is expected to reach $40 billion.



The opinions expressed above are those of the author.



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