Every morning, like clockwork, MBA student Nandan Toshniwal opens FreshMenu and orders himself breakfast. While he always knows what to order, when it comes to payment, he pauses. Cashbacks draw him to wallets. But he’s often short. So what does he do? Enter Pay Later. One click, no immediate transaction, and he’s done.

Now, the 25-year-old runs an advertising company, and Pay Later has become a habit for him. “I have abandoned wallets. Pay Later is my default option as I have a credit limit of Rs 10,000 every week. On merchants where Pay Later is not available, I use my debit card,” he says. “I get one itemised bill every 15 days and that captures all the payments I made to buy movie tickets, order food, buy groceries. It’s simple, really,” he insists.

Toshniwal’s switch points to a larger opportunity—the wallet-sized hole in the payments ecosystem in India. Unified Payment Interface (UPI), currently the fastest way to pay online, comes closest to filling this hole. But not entirely. At last count, you had net banking, credit cards, debit cards, wallets, UPI, Aadhaar Pay, all of which have two forms of authentication. For the Reserve Bank of India, two-factor authentication (2fa) is like the sacred cow. It can never be sacrificed.

But Pay Later has found a way around this. The two-year-old payment option is a one-click wonder with no One Time Pin (OTP), no m-pin, no CVV, no mother’s birth date and first boss’ name, no biometrics, and no Aadhaar number.

Over a 100 online merchants, such as those for food delivery, movies, travel tickets and utilities, have included the Pay Later product of Simpl, Lazy Pay or Paytm PostPaid (available only for a cross-section of users who use Paytm and bank with ICICI Bank). About a million people use this option (who might not all be unique). But while some use it as a payment option, others see it as a credit fix. Paytm did not want to comment on this article but it reportedly has about 10,000 users. 

Varun Jain, who runs a B2B business, sees it as a faster way to pay. The 30-year-old businessman orders from FreshMenu and uses Dunzo for tasks at least twice a week, spending Rs 300-500 each time. Having lived in the US for five years, he says he misses the single-click experience in India. But for others, like 22-year-old Abhishek Balaji in his first job as a content producer, Pay Later is a replacement for credit as banks wouldn’t offer him credit cards. “I want money in my account to be able to make large payments like rent; I didn’t want the main cash flow getting affected,” he says. He uses Pay Later to avoid cash transactions.

Wallets, UPI, and now Pay Later, are all cash replacements. Pay Later is riding on the momentum that wallets gained in three years.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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