Consider this: out of 900 million Indians who use banking services, barely 30 million 30 million The Economic Times Credit card usage rides on digital push, grows 27% Read more  are unique credit card holders. That’s only around 3.33% of banked Indians with easy access to credit. Not having enough credit puts a lot of things out of reach, such as the ability to afford medium- and big-ticket purchases. 

It’s an endless loop—without enough credit, users can’t build up their credit score, and without high enough credit scores, loans get more unattainable. 

So when a company comes along, saying, “Here’s money for that smartphone you wanted, pay us back in two weeks,” without credit score checks or the hoop-jumping required to apply for credit cards, it piques the interest of customers. According to payments gateway unicorn Razorpay, the number of ‘Buy Now Pay Later’ (BNPL) transactions it facilitated in November spiked 163% compared to the same period the previous year.

These BNPL offerings vary wildly. Credit amounts can range from as little as Rs 2,000 ($27) to a general upper limit of Rs 10,000 ($135), where customers have to pay back the sum in one go. Repayment periods also differ—from two weeks to as much as a month. A delay in repayment can lead to late payment charges of up to Rs 100 ($1) per day. 

Move beyond the basic definition and the line only blurs further between the different offerings, iterations, and products that companies offer in the BNPL segment. 

Those such as Lazypay, the BNPL product offered by payments company PayU India, or BNPL startups such as the Bengaluru-based Simpl and Mumbai-based ePayLater follow the deferred payment model. These players see most adoption via merchants such as food delivery players Zomato and Swiggy, and e-ticketing platform BookMyShow, among others. This model isn’t exactly new (we wrote about them here here The Ken Pay Later, the next wallet Read more ). 

There have also been companies lending—and subsequently building multimillion-dollar businesses—through EMI-based repayment schemes for a long time now. Payments solutions provider Pine Labs Pine Labs The Ken Pine Labs – Unicorn Future, Hoary Past Read more  and Bengaluru-based lender ZestMoney both offer higher sums of money, upto Rs 1 lakh ($1360), for an extended period. 

Then there’s a third camp, filled with non-fintech companies who also want a piece of the BNPL pie.

AUTHOR

Bhumika Khatri

Bhumika covers e-commerce, consumer internet, and everything startup for The Ken in Delhi. In her previous stint at Inc42, she spent two and a half years writing about a breadth of startups and topics. A commerce graduate, Bhumika completed her postgraduate in journalism from the Indian Institute of Journalism and New Media, Bengaluru. You can reach her at Bhumika@the-ken.com

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