Buy now pay later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay for them in the future. Opposed to credit cards, BNPL customers may not have a credit score. The onboarding is via digital KYC and the interest rates range from 0-35%. BNPL services, both B2C and B2B, gained traction in India post Covid and it typically comprises of 4 players: RBI Regulated Entities (REs), Loan Service Providers (LSPs), merchants and customers. However, BNPL have had certain problems, which include lack of transparency, mis-selling, unethical recovery practices and default risks. Due to this, RBI intervened to regulate digital lending in the BNPL space and promote customer protection, financial protection and growth.
This BNPL study is authored by Priya Sharma and Rahul G, members of Yubi’s Platform Engagement team.
India has emerged as one of the largest fintech ecosystems in the world. As technology advanced rapidly in the last decade, it has been responsible for the global transformation of businesses. Driven by expansion of e-commerce and digital payments, Buy Now Pay Later (BNPL) has become an emerging sector in India.
Additionally, GenZ consumers, young millennials, and first-time credit borrowers, who are typically overlooked by traditional banks, choose Buy Now Pay Later due to ease of access. Despite being faced by regulatory hurdles (RBI guidelines on digital lending), the market is expected to grow exponentially.
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