Today, most products are available online enabling consumers to shop from the comfort of their homes. Right from daily essentials to furniture and even jewellery, everything is accessible to everyone on the internet.
But, even while many want to shop and buy them online, very few can afford to invest in a high-value purchase with an upfront payment. This is where Buy Now Pay Later (BNPL) has an important role to play. In a nutshell, it introduces affordability in e-commerce and lets consumers own products before they have completed the payment.
If you are yet to offer this mode of transaction to your customers, here’s why BNPL should be the focal point of your payment options.
What is Buy Now Pay Later (BNPL)?
Buy Now, Pay Later (BNPL) is an innovative short-term financing option that benefits new to credit users as well as consumers with existing credit history. Users can avail a loan at the point of sale to purchase a product without the need for a credit/debit card.
Customers are allowed to pay the balance amount every month based on the timeline stated by the company without incurring any additional interest. However, they can be charged late fees for missed payments in case of default. Buyers can also club their monthly purchases on the platform into a single bill.
BNPL payment adoption in India is expected to grow steadily over the forecast period, recording a CAGR of 41.2% during 2022-2028. The BNPL Gross Merchandise Value in the country will increase from US$7,204.5 million in 2021 to reach US$97,717.0 million by 2028.
Who does BNPL target?
Buy Now Pay Later has certainly influenced the buying behaviour across demographics making e-commerce convenient, accessible and affordable. Considering that the user needs to submit few details and no credit history to activate, its most ideal consumers are likely to be younger buyers, particularly Gen Z and millennials.
On the contrary, a research by Statista suggests that Buy Now, Pay Later (BNPL) payment services in India are mostly used for fashion and electronics purchases, with nearly eight in ten consumers aged between 45 and 54 years using BNPL payment services for electronic products or smartphones.
| Benefits of BNPL for buyers |
| Better affordability |
| No hidden costs |
| Better planning of expenses |
| No credit history required |
| Zero interest-rate |
How does BNPL ensure affordability in e-commerce?
Buy Now Pay Later addresses several of the buyers’ pain points and simplifies the system of purchase through credit.
Here’s a look at some of its benefits:
1. Buy Now Pay Later solves for the complexities involved in first obtaining credit and then using it to buy high-value goods. Your consumers can now own products in a couple of clicks and with a small down payment.
2. E-commerce stores that offer their users the option of transacting through BNPL ensure that the buyer does not abandon the cart because of the lack of this affordability option.
3. Since Buy Now Pay Later can be availed with minimum upfront costs and no-interest EMI, consumers are able to invest in expensive purchases leading to an increase in average order value for your business.
4. Very few people in India have a credit card and many are ineligible to own one most likely due to their poor credit scores. A business that offers Buy Now Pay Later ensures inclusivity and helps buyers opt for a loan without a credit history resulting in better conversions for itself.
How does Paytm Postpaid offer affordability to its users?
Paytm Postpaid is a Buy Now, Pay Later facility offered by Paytm’s NBFC partners which is available in the form of line of credit (small on-demand loans) for online as well as offline purchases.
Users can buy products by availing a credit up to INR 60,000 every month with zero interest rate. There are no additional charges for activating Paytm Postpaid and can be instantly used for payments upon approval.
Paytm Postpaid extends affordability to your consumers ensuring an interest-free credit for up to 30 days so that they have enough time to manage the funds. It can be used at more than 1.5 cr stores across the county including all the popular websites and apps.
| Additional benefits of Paytm Postpaid |
| Offers hassle-free single-click checkouts |
| 100% digital process |
| Does not require proof of employment or definite credit score |
| Helps build and improve the Credit Score |
If you wish to learn more about such topics, you can read our knowledge base blogs and apply your learning to your business.
