Is ‘Buy Now Pay Later’ the future of lending in India – Times of India

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Rohit Arora, CEO & Co-founder – Biz2Credit Inc
According to data from a recent survey, “The Future of Financial Services report,” India leads the world in its intent to use “Buy Now Pay Later” services in the future.
The pandemic-induced economic changes led consumers to shop online. People took to the internet to order groceries, clothes and other essential items. Buy Now Pay Later (BNPL) emerged as more than just a simple payment mechanism; it essentially reduced borrowers’ financial stress by delivering no-cost EMIs. 
Furthermore, the symbiotic link between e-commerce and BNPL has a bright future. According to Goldman Sachs, the Indian e-commerce business is set to become a $99 billion market by 2024, driven by consumer demand. At the same time, BNPL will become the fastest-growing online payment method, increasing from 3% in 2020 to 9% in 2024.
How common is BNPL as a mode of payment?
Buy now pay later (BNPL) is an emerging lending tech sector in India due to the advent of e-commerce and digital payments, and a rapid increase in the number of Fintechs. Moreover, because of the simplicity of access to credit, BNPL is the most popular product among GenZ consumers, young millennials, and first-time credit borrowers, who are frequently neglected or overlooked by traditional banks.
According to a survey, India’s BNPL market would grow to $45-50 billion by 2026, up from $3-3.5 billion today. According to the research agency, the number of BNPL users in the country might increase to 80-100 million by then, up from 10-15 million now.
This has prompted more companies to enter the Buy Now Pay Later (BNPL) market.In India, there are about a dozen BNPL players. Traditional banks are also joining the BNPL bandwagon by collaborating with new age Fintechs. 
Is BNPL a better option than credit cards?
Digital natives and tech-savvy customers, millennials and Gen Z, are increasingly shifting to the concept of micro-credit and purchase now pay later services for a more seamless user and merchant experience.
Credit cards have been around for decades and have gradually but surely found their way into the internet purchasing ecosystem. The difficulties of documentation, credit score requirements, many rounds of identification, and so on, on the other hand, cost time and effort.
BNPL has stepped up to remove these friction points as millennials and Gen-Zs lose patience with traditional paperwork and demand for flexibility and transparency grows.
Is BNPL the future of lending?
The lending industry in India is simply too large for a single individual or sector to service. BNPL will not replace traditional credit, but it may enhance it in two ways, thanks to the power of collaboration.
To begin with, BNPL has the potential to provide loans to a credit-starved economy such as India. BNPL loans, in contrast to traditional credit, are mainly used for online shopping or paying utility bills. As a result of this combination, they are swiftly becoming a standard type of online dealing.
This is quickly changing BNPL’s perception from a loan instrument to a lifestyle symbol that allows individuals to buy the products they want at a reasonable price. BNPL will bring the next billion into the official financial fold. Because the vast majority of BNPL borrowers are new to credit, BNPL is paving the way for them to improve their credit ratings and enter the formal financial market, thereby improving financial inclusion in the country.
Traditional financial institutions may also use this credit history data to build a more thorough and efficient credit risk assessment model. This will make it easier for people who have been denied credit to acquire access.
Summing Up 
BNPL has become more than a credit instrument; it has become a way of life. It will soon become India’s principal engine of credit expansion. The BNPL revolution in India is only getting started; it will change the face of credit in the country over time. 
Also, as smartphones and internet connectivity spread across India, the reach of BNPL payment providers is only anticipated to grow.
According to a report by Redseer Consulting, BNPL segment is growing by 65% YoY.  By 2025, it is anticipated to reach $40 billion.
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Views expressed above are the author’s own.
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