What Will Be The Growth Of Buy Now Pay Later In 2022 And Beyond?

Look around the digital payments market, and you’ll see everyone – industry newbies, PayTechs, and even BigTechs – coming up with unique solutions that cater to individual and commercial clients across the country.

As a result, some analysts believe the payments industry is approaching a new era known as Payments 4.0, in which payments are embedded and undetectable, allowing for a frictionless customer experience.

New-age enterprises are pressing ahead to grab the lead in the Payments 4.0 era by leveraging the popularity of non-card products and services, while incumbents struggle with earnings. Collaboration, platform fiction, and companies prepared to embrace API-based business models and open ecosystems are all required in this new era.

Buy now, pay later (BNPL) has risen from obscurity to become one of the most popular payment methods in recent years. This is the year that BNPL will become a mainstream payment method very soon.

Installment payment plans aren’t new; for decades, shops such as furniture stores have allowed customers to pay for significant items in installments.

Buy now pay later brings the notion into the digital age by allowing any business, both online and in-store, to provide installment payments for any product, no matter how small.

BNPL is a fast-growing shopping option that allows customers to postpone payments on product purchases until the conclusion of the billing cycle. For payments completed within the credit duration, the short-term funding option divides repayments into flexible installments, often without interest.

When shopping online or through a mobile app, you’ll usually see the option to purchase an item with BNPL loans, however, they’re also available in stores. BNPL loans come in a variety of shapes and sizes.

One popular payment plan divides the product’s cost into four interest-free monthly payments. The first payment may be payable at the time of purchase or two weeks later. Unlike a credit card, your creditworthiness may be assessed each time you make a transaction with a BNPL loan.

Based on the market players, India’s buy-now-pay-later (BNPL) industry is thriving and on track to grow tenfold in the next four years as tens of millions of online buyers are enticed by interest-free financing and fewer hassles.

According to Redseer, the BNPL market in India will grow to $45-50 billion by 2026, up from $3-3.5 billion presently. According to the research firm, the number of BNPL customers in the country could increase to 80-100 million by then, up from the current 10-15 million.

BNPL solutions are frequently referred to as no-interest credit cards that do not require a credit check. This is frequently the case, although it is by no means a general rule. In truth, company strategies vary greatly, especially in areas where there is minimal regulation.

We should expect a lot of innovation from BNPL companies like ZeroPay in the next months, thanks to robust investment and investors hungry for returns.

Consumers profit the most from aggressively leveraging BNPL since they now have access to credit that was previously unavailable to NTC (new to credit) borrowers.

It also aids in the installation of financial discipline in terms of debt payment, resulting in the development of a credit history that will aid future access to relatively less expensive loans.

The partner merchants win since the volume of business on their platforms has grown to the point where high-margin merchants are now giving interest-free loans to their clients.

Institutions that offer BNPL products have increased their revenues due to different income streams such as finance costs and subscription fees, and it has helped them establish a client base that will use credit products more frequently in the future.

Time-saving – Consumers can get what they need now rather than waiting for their next payday.

Ease of Use – Allowing installment payments is extremely practical and simple, especially for more expensive purchases.

Convenience – Customers are often relieved of the burden of paying high-interest rates or late penalties!

Given that only 3.33 percent of India’s 900 million registered bank customers use credit cards, BNPL has a huge opportunity to tap into the untapped credit potential.

Players in the BNPL are ideally positioned to fill this hole, as the country’s low credit card usage is due to concerns about high-interest rates and hidden costs.

Increasing customer loyalty – As BNPL becomes more of a commodity, stores will soon offer multiple BNPL options (just like paying with different credit cards). As a result, fintech will have to diversify its product offerings to win not only merchants but also customer loyalty.

At the same time, high loyalty leads to greater cross-sell opportunities, particularly for organizations with diverse financial and insurance product offerings.

The BNPL market is expected to grow exponentially in the next few years, owing to the continued rise of smartphone users (now projected at 800 million) and increased connection, particularly in tier II and tier III cities.

According to the Reserve Bank of India, 65 million credit cards are currently in use, with an estimated 40 million unique card users. Given India’s whopping 170 million internet shoppers, BNPL has a lot of potential in the country. BNPL can be tremendously advantageous to all of the primary elements as a product category, especially in a credit-starved country like India.