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Credit cards are accepted; consumers choose “buy now, pay later” – The New Indian Express

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Express news service

BENGALURU: Since the start of the pandemic, there has been a massive shift in consumer preferences towards online shopping and digital payments.

These preferences have propelled the adoption of Buy Now and Pay On Pay (BNPL) services.

Because consumers can buy now and pay them back over time, e-commerce and fintech companies have compelling offers like zero interest and instant cashback.

These companies are also seeing a huge response from consumers.

Fintech Paytm, which recently went public, said that over the past 18 months, the company has seen strong adoption of credit products on its platform, primarily Paytm Postpaid, which is the BNPL product of the company.

“The number of loans disbursed increased 714% year-on-year to over 2.8 million in the second quarter of fiscal 22. Lending business continued to show strong growth due to the the rapid scale of all of our loan products, including postpaid products (BNPL), consumer loans and merchant loans, ”said a spokesperson for Paytm.

Paytm says the growth rate suggests the scale-up may be quite large compared to where it is today and that they see a pretty big opportunity in India.

“Our partner financial institutions disbursed approximately 1.3 million loans in October 2021, which shows a cumulative increase of 472% in the number of loans disbursed year-on-year and totaling a total disbursement of Rs 627 crore, which implies an increase of 418% of the value of disbursed loans year on year. “, adds the spokesperson. So if a student without a credit card wants to buy a laptop computer, the student can do it instantly and also break down into 6 or even 8 payments.

Flexible EMI options

Flipkart, the leader in e-commerce, has seen a 2X year-on-year growth in the number of customers using Flipkart Pay Later with some of the major categories such as Lifestyle, Grocery, Home and Electronic Accessories. Ahead of this year’s holiday season, Flipkart launched ‘Flipkart Pay Later

EMI ‘facility, offering a line of credit of up to Rs 70,000 for clients, which can be repaid over flexible terms.

“The early response over this holiday season and beyond has been overwhelmingly positive, with Flipkart Pay Later EMI contributing to a healthy and rapidly growing share of all NDEs on the platform,” said Dheeraj Aneja, Senior Vice President and Head of FinTech and Payments Group, Flipkart.

Growing adoption of BNPL

Redseer’s research indicates that the Indian BNPL market will reach $ 45-50 billion by 2026, compared to the existing $ 3-3.5 billion.

According to Research and Markets, the higher purchasing power offered by BNPL in times of the coronavirus pandemic is driving the industry’s growth.

The strong growth of the e-commerce sector has helped start-ups and fintech giants to establish their footprint in the BNPL space in India.

For example, the Pay Later service offered by Amazon has more than two million users in India and has already been used more than 10 million times since its launch in April 2020, the report says.

The report adds that BNPL payment adoption is expected to grow steadily, registering a CAGR of 28.9% during 2021-2028. BNPL’s gross merchandise value in the country will grow from $ 3.7 billion in 2020 to $ 37.5 billion by 2028.

E-commerce players partner with fintech players / non-bank financial services companies or banks and offer various options to customers. Banks have also made a foray into the BNPL segment, such as HDFC Bank’s FlexiPay, where you can select a duration ranging from 15 days to 90 days; PayLater from ICICI Bank, where you can get up to 45 days of interest-free digital credit.

Paytm has forged strategic partnerships with major banks and NBFCs and achieved positive results. The Paytm spokesperson said, “We plan to accelerate our strategic penetration into the BNPL market segment through India-wide demographics and geography and dramatically increase new customer acquisition. and the acquired secondary ecosystem and use cases both offline and online, leveraging a strong distribution of Paytm Payments. . “

Fintech players such as Simpl, ZestMoney and Uni, among other prominent players, offer many discounts and choices to customers. Simpl, an outright BNPL fintech player, has seen an upward trend in the BNPL space. In the past two months, Simpl has onboarded 4,000 merchants, bringing the total number to over 7,000 to date.

Credit and debit cards are widely used payment methods, but people’s interest in alternative payment systems has accelerated in a post-Covid world, and India is no exception. Buy Now Pay Later offers the easiest and most convenient payment options. We have seen robust revenue growth with a significant increase in the number of monthly active merchants, bringing the total number of partner merchants to over 7,000 and 10 times the growth of the active user base over the past 18 years. months, said Nitya Sharma, co-founder and CEO of Simpl.

Uni, which has a presence in the top 50 cities nationwide, says millennials and GenZ prefer the new payment option. “The BNPL format helps them better plan and resolve short-term liquidity crises,” says Nitin Gupta, founder and CEO of Uni.

From the monthly disbursement of Rs 80 lakh in June of this year, Uni is currently recording Rs 120 crore in monthly disbursements from November 2021, and is increasing at the rate of 40% MoM. Uni is also planning to launch affordable EMI plans if customers need longer repayment terms of 6,9,12 and 18 months.

The path to follow

While it is evident that the BNPL space will see significant players and exponential growth in the future, there are also concerns such as late payments and consumer debt. Also, as in India the segment is nascent, there is no standardization. According to Research and Markets, the size of the US market for BNPL was estimated at a few billion dollars in 2019, but is estimated to have increased by 1,200% by 2024. Now, US regulators are concerned about the non-regulation of credit.

Fintechs are capitalizing on the growth of point-of-sale (POS) products, including BNPL, which could pose a longer-term competitive threat to banks and card companies. Failure to adapt and compete effectively with these new payment / commerce structures could erode market share and reduce profitability, which could lead to negative rating dynamics for monoline card issuers, according to Fitch Ratings.


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