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What is Buy Now, Pay Later & Why is it Popular in India

Buy Now Pay Later
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Courtesy of the lockdown, online shopping and digital transactions have become pretty mainstream. A big reason for this is that brands and vendors have started offering customers a very convenient payment method – Buy Now, Pay Later, or BNPL. Buy now, pay later has become a popular and preferred way of payment. Unlike before, when people had to either abandon their carts or make fully, sometimes hefty payments at once for purchases, shoppers now have the option to break the overall payment into small amounts.

What is Buy Now, Pay Later?

Buy now, pay later, also known as BNPL, is an instalment-based financing option. It allows you to divide your purchases into multiple equal payments, starting with the first instalment at checkout in most cases. The remaining amount is billed to your credit or debit card until it is paid in full.

Buy now, pay later, often comes with no or very low interest.

How Does BNPL Work

Although every company has different terms and conditions for BNPL plans, the general process goes somewhat like this:

  • You will get the buy now, pay later option at checkout to break your total purchase into smaller amounts.
  • Fill in the required details, such as name, address, contact details, date of birth, Aadhar, Pan Card or any other form of identification and address proof. You will also need to mention the payment method.
  • There are different BNPL India plans, but most companies offer a ‘pay-in-four’ model that divides the purchase amount into four equal instalments.
  • Your first payment is at the time of purchase.
  • Choose to pay via credit card or bank transfer, and the amount will be deducted automatically.
  • If you are making the purchase via credit card, you need to pay the minimum amount due on the card every month, and the interest is accrued on the remaining amount.

Who Offers BNPL Plan?

Leading stores like Gap, Sephora, and e-commerce portals like Amazon, Myntra, and Nykaa partner with several BNPL service providers to offer easy payment options to their customers. Some companies offer zero interest, while others can charge up to 30% with terms up to 48 months. Buy now, pay later is, in fact, a super convenient payment option, but you must keep in mind that if you fail to pay an instalment on time, you may have to pay a fee for delayed payments.

If buy now, pay later is something that suits you well; some great online platforms offer similar options to help you make purchases online with ease of payment. KreditBee is one such online platform that helps salaried and self-employed individuals avail of personal loans from various providers such as NBFCs and Banks. One of the product offerings is a shopping loan, a hassle-free alternative to BNPL that allows you to make a purchase and pay with easy EMIs later. When you apply, you get e-vouchers that you can use when shopping from their partner platforms like Amazon, Flipkart, Myntra, Nykaa, MakeMyTrip, Goibibo, Tata CLiQ and more.

Why is BNPL Gaining Popularity?

Most online shoppers abandon their carts at the checkout stage because they can’t afford the final combined cost of products they wish to purchase. Thanks to buy now, pay later plans in India, this last step is less of a hurdle, making purchases way more affordable for potential buyers as they can now pay most of the amount at a future date through EMIs. With the buy now, pay later option in India, merchants are able to encourage customers to opt for the plan by offering 0% or low-interest options with easy, manageable terms and conditions.

Although BNPL has been around for a few years now, it gained popularity during the lockdown when people faced salary cuts and financial setbacks. Also, this was the time when online shopping spiked. People needed a quick and affordable way to make payments for their purchases. The buy now, pay later model enabled them to make quick purchase decisions, and for brands and merchants, it meant not losing out on sales.

Moreover, it caters to people who are new to credit and have no credit history, making it possible for them to seek short-term loans. BNPL is used by over 30 million people in India, and online portals have witnessed a 40% increase in transactions. The numbers are expected to grow in the coming years with approximately a 70% increase in BNPL payments in India, which will make the country one of the fastest-growing markets for such payment plans. This financing option is expected to share 9% of the e-commerce market by 2024.

Summing it up…

Considering that BNPL offers a win-win situation for both – the customers and retailers, there are several different formats it has adopted to. There are even vacation deals that you can buy now and pay later for – who knew that you would be able to grab a deal and then make arrangements to pay for it at a later date and not miss out on great deals!

Author Bio: Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.

Photo by Karolina Grabowska

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