Although Buy Now Pay Later (BNPL) services have been around for a while, it was the pandemic that had propelled its adoption globally. In a country like India that has over a billion people and a large credit-averse population, BNPL is quite simply, disruptive. In fact, some of the biggest players in BNPL with the highest expected growth potential are in India.
- Buy now pay later is striving in India and is set to surge over ten-fold within four years.
- Redseer estimates India’s BNPL market will rocket to US$45-50 billion by 2026 from the current value of US$3-3.5 billion.
- BNPL users in the country may rise and reach between 80 to 100 million customers by then, from 10 to 15 million currently.
For the uninitiated, BNPL services allow consumers to buy products and pay them off over time. Repayment policies differ between BNPL platforms, and payment plans typically comprise weekly, bi-weekly, or monthly schemes. Some platforms provide attractive offers like zero interest and the flexibility to pay-in-installments.
Indian research firm Redseer reckons that India’s buy now pay later industry is thriving and is set to surge over ten-fold within four years — mainly because of the tens of millions of online shoppers the country has.
As per Reuters’ report, Redseer estimates India’s BNPL market will rocket to US$45-50 billion by 2026 from the current value of US$3-3.5 billion.
To top it off, the research firm also estimates that the number of buy now pay later users in the country may rise and reach between 80 to 100 million customers by then, from 10 to 15 million currently. It will, however, take the sector some time to disrupt the cards market and snatch more market share considering how the maximum credit currently being offered on BNPL is 100,000 rupees (US$1,347.89), much lower than credit card offers.
Overall, consumer demand will drive the Indian e-commerce industry to grow into a US$99 billion market by 2024, according to Goldman Sachs. That would also lead to BNPL becoming the fastest growing online payment method, from a 3% share in 2020 to 9% in 2024.
The strong growth of the Indian e-commerce sector is also a catalyst to more startups and fintech giants establishing their footprints in the local buy now pay later space. Take Amazon for instance, the pay later service offered by the American conglomerate has more than two million users in India alone and has already been used more than 10 million times since its launch in April 2020, according to Research and Markets.
Additionally, just like most other Southeast Asian countries, the higher purchasing power offered by BNPL in times of the pandemic is driving the growth of the sector. For India in particular, the informal nature of accessing credit is acting as the primary driver behind the rise of the BNPL segment.
Currently, several local companies such as Paytm, LazyPay, Simpl, ZestMoney, ePayLater, Flexmoney, and most recently BharatPe, are operating in this space and have essentially changed the way credit works in India.