Payment Program in Fintechs: Buy Now, Pay Later

Fintechs have disrupted the way traditional banks have functioned to this day and paved a path for themselves. They have leveraged the estimation that only 8% of the world’s currencies exist in physical form and the rest is cached as mere digits inside computer memory. Fintechs have evolved surrounding this fact by offering integration between financial and technological resources to develop financial solutions for organizations. Furthermore, Fintechs have been enabled newer technologies by integrating Touch ID, Face Recognition, Biometric, etc. to services offered by financial circles. Considering the current pace, as per estimations, the global Fintech market will touch $330 billion by 2022.

Before Covid-19, Fintechs were emerging as challengers to traditional banks but, by the end of 2020, Fintechs have progressed drastically and stand as strong contenders today.

Today, Fintechs have fabricated and launched a variety of appealing services. With the help of technology, customers are given offers and payment options like never before. A widely used Fintech service- Buy Now, Pay Later (BNPL), a credit system, that has changed the landscape of credits and is swaying the market.

What is Buy Now, Pay Later?

BNPL is an online payment credit system that allows a customer to purchase today, online or in-store and pay at a future date, often interest-free. It is a type of credit that is transparent, seamless, quick and without any prerequisites.

How has it changed the market?

The new dynamics in payments has highlighted multiple limitations in the traditional payment landscape. The FinTech drive is slowly covering this inherent payment limitation. Today, a person can avail credit ranging between Rs 10 to Rs 1,00,000 with a repayment span of 30 days to 36 months. The Indian market is under-penetrated by credit cards since only 30 million people use them. Hence, Fintechs took note of this loop-hole and devised a strategy to overcome it by introducing a credit system, BNPL, without prerequisites.

As of today, BNPL is the fastest growing online payment method with an estimation to reach 8% in 2024 from 3% in 2020. A survey has predicted that BNPL would grow by 65.5% in India, reaching a value of $ 11.57 billion in 2021. Furthermore, the adoption of BNPL is to rise by a whopping 24.2% CAGR from 2021 to 2028.

Realizing the potential of BNPL, several merchants like Amazon Pay, PayTM Postpaid, Flipkart Pay, etc. offer services not only on their platform but also through their channel partners. The amount and duration depend upon the transaction size and vendors but this ensures an increase in their audience size. For eg: Amazon Pay has a credit limit for customers of Rs 10,000 with a duration of 20 days whereas PayTM Postpaid offers a 30-day duration and amounts up to Rs. 1,00,000.

Fintechs have anchored a base with BNPL since they do not have to comply with all the lending obligations that apply to banks and other lenders. Moreover, with a boost in online transactions in Tier 2 and Tier 3 cities due to improved internet connections and shopping facilities, BNPL has also managed to widen its reach.

Today, BNPL is the most sought-after service by Fintechs and as time progresses, it has the potential to uptick major payment options.

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