Is “buy now, pay later” a curse or a boon? Opinion of users and experts


BNPL or buy now pay later is a payment option that allows the buyer to purchase an item without immediately paying out of pocket. This can be done by registering with a company providing this facility, which makes the payment on behalf of the buyer. The customer can then repay the amount to the company within a stipulated time.

For some of the users BusinessToday.In spoke to, this is a fantastic option, but some felt that the BNPL is not much different from a credit card because, in the end , both create credit.

However, startup venture capital fund believes that BNPL makes buying more convenient and is here to stay and change the fintech ecosystem.

What users say

For Vipul Agarwal, who works at a Chicago-based CSR firm operating in India, there is no downside to BNPL. “The fact that you can pay, you can pay your bill after three months instead of every month, the ability to get gift cards for companies like Amazon, MakeMyTrip, etc., and the Ease of reimbursements and expense tracking are all benefits of using BNPL services,” he said.

But Rohit Nair, who works at a Delhi-based media company, isn’t very keen on the concept. “What BNPL is doing is trading future security for instant gratification. If you are using BNPL, it indicates that you cannot afford to buy something right now but hope that tomorrow you can. But there are no guarantees. It is therefore a kind of debt trap, where your interests are likely to accumulate. Also, to take full advantage of BNPL requires immense financial discipline, but few young buyers have such financial discipline,” he said.

Sailesh Ramakrishnan, Partner, believes that BNPL is not a fad but a key aspect of e-commerce. “We believe that credit is an important aspect for the development of a rapidly growing economy and BNPL is a specialized form of credit. While India has always had the concept of installment plans etc., BNPL is bringing this convenience right to the point of sale,” he added.

Will BNPL change the fintech ecosystem?

Ramakrishnan explained that one of the main reasons consumers abandon shopping carts is that they feel they cannot afford the final price displayed. “BPL allows consumers, at this final stage, to consider a much more affordable way to complete the purchase. Retailers may encourage this to help make the sale, as some even offer 0% interest,” he added.

BNPL is then a significant win-win for consumers and retailers, he said. Ramakrishnan said they expect BNPL to expand into offline commerce as well with stores offering BNPL options with a much lower initial cash requirement. also aims to identify and invest in BNPL companies for B2B. “Companies also buy many things that they need and require similar credit support and they are much better at assessing risk than an individual,” he said, adding that specific verticals such as jewelry financing and cars also offer many opportunities for BNPL. .

BNPL Risks

From a business perspective, they need to do a risk assessment very quickly and set the bid price correctly, because BNPL ultimately works at the point of sale, Ramakrishnan said. “However, they need to do this without significantly inconveniencing the customer by asking them to fill out forms or demanding a lot more information. Risk modeling is therefore key. As with anything new, consumers might behave a bit irrationally, which could lead to initially higher default rates,” he added.

A BNPL company should keep two important factors in mind: the risk model and the cost of capital. “The BNPL solution and its internal risk model must be tailored to the use case (different models for BNPL for groceries versus a car). Companies also need to eventually develop their own sources of capital so that the cost capital does not become prohibitive for them,” Ramakrishnan explained.

Rise of the BNPL

The concept of BNPL has received greater traction amid the pandemic. Buyers preferred to break down large expenses into small, interest-free EMIs. Companies have also swallowed the demand and ensured that BNPL loans are easily sanctioned, which also explains its popularity. But one must keep in mind that these loans must be paid within the stipulated time to maintain a healthy credit score.

LazyPay, Simpl, ZestMoney, Amazon Pay Later, Slice, Paytm Postpaid, Ola Money Postpaid are few companies offering BNPL services in India.


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