Finflux Technology - Empowering "Buy Now Pay Later" Platforms

Buy Now Pay Later (BNPL) has gained tremendous traction from pre-covid levels to what we see now. Pine Labs, India's largest BNPL EMI processing platform witnessed 60-70 more percent demands compared to January 2020. Similarly, Zest Money has seen demand in excess of 140 percent. Capital Float, partnered with Amazon Pay Later claims it has financed ₹400 crores within the span of seven months. What indeed is brewing with this one-tap user experience product?

BNPL offers hassle-free instant credit. It is form-agnostic, unlike plastic cards. Flexible contracts, easy payment terms and eligibility based limits that you can bite. You tap your credit when you need it. When you need to check out or buy. One can digitally apply while shopping and pay with the credit facility.  The transactions can be small ticket or medium to large, where they can be aggregated for a billing cycle. There is no interest during the billing cycle, just like traditional credit cards which offer 60 days of interest-free period. The interest is subsidized by the bank or retailer or merchant.

A large population of millennial customers are new-to-credit (NTC).  According to a report by Credit Suisse Group AG, India’s digital payments market is expected to grow to $1 trillion by 2023, an increase of five times from the current (2020) $200 billion market. A lion share of these is made by the Gen Z segment. They cannot afford to have a credit card. The other part of the stratification belongs to the low-income-group (LIG) or segment whose cashflow affected by Covid-19. These modern borrowers like a transparent financing option. They like the convenience of aggregating their expenses and pay once in a month or fortnight at the convenience of smartphones. For instance, for any purchase between the 1st and 15th of the month, the first EMI will be due on the 5th day of the next month and for any purchase between 16th and till the end of the month, the first EMI will be due on the 5th day of the month next to the subsequent one. For the salaried segment, this is a boon. They have choices to choose no-cost-EMI or flexible tenor at lower interest rates, should there be a hardship.

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