However, the BNPL (Buy Now Pay Later) payment mechanism now enables customers to make deferred payments. BNPL option allows customers  to purchase wide range of products and services from merchants even when their bank balance is low.

Understanding the Buy now pay later market

The BNPL industry has revolutionized the way installment payments are offered to customers with flexi-pay options.

The option is applicable to individual transactions and has become highly appealing to young customers, Millennials and Gen Z who would like to make low financial commitment on lower ticket items.

The upsurge for BNPL began in the pandemic phase. 

As consumers are steadily chosing to pay for goods and services in interest-free installments instead of lump sums, the market for buy now, pay later is expected to grow to almost $3.7 trillion by 2030, according to Straits Research forecast.

A Juniper Research report estimates that by 2027, the number of people using BNPL could almost triple to 900 million.

BNPL in India

BNPL is still an emerging trend in India with the upsurge in Fintechs.

The trend is hot amongst young buyers and first-time credit borrowers the reason being not being able to stand up to the mark by traditional banks and being overlooked for traditional credit borrowings.

India’s BNPL market would grow to $45-50 billion by 2026, up from $3-3.5 billion today.

It is quite possible to see an upsurge increase in the BNPL users to 80-100 million by then, up from 10-15 million now.

BNPL vs Credit Cards

• Tech savvy customers, new age youngsters, Gen Z are rapidly adapting the trend of micro-credit system such as BNPL as it allows seamless credit payment and excellent merchant experience.
• Credit cards on the other hand are more complicated due to their ecosystem that includes documentation, credit scores, identification rounds and other procedural processes that are time consuming and require a lot of effort by the individual. In this tech era we hardly have time or patience for any of it.
• BNPL makes the experience seamless without these hassles for tech savvy buyers who often lack the patience and appreciate flexibility with transparency.

Reasons why BNPL may be the future of lending

• BNPL is in contrast to the traditional system of credit and allows easy payment for online shopping and even used for paying utility bills.
• In this digital era it is more of a lifestyle symbol allowing individuals to purchase products at an affordable pricing system.
• It is possible that in near future traditional lending institutions may rely on the data collected through the BNPL system and include people who were earlier not a part of the traditional credit access process.