Business flourishing for India’s buy-now-pay-later industry
08 November 2021 - 16:59
byNupur Anand and Sankalp Phartiyal
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
A woman shops inside a Big Bazaar retail store in Mumbai, India, November 25, 2020. Picture: REUTERS/NIHARIKA KULKARNI
Mumbai — India’s buy-now-pay-later (BNPL) industry is booming and set to surge over tenfold within four years as tens of millions of online shoppers get lured by interest-free credit with fewer hassles, say market players.
Redseer estimates India’s BNPL market will rocket to $45bn-$50bn by 2026 from $3bn-$3.5bn now. The research firm also estimates that the number of BNPL users in the country may rise to 80-million to 100-million customers by then, from 10-million to 15-million now.
However, since the maximum credit being offered on BNPL is 100,000 rupees (R20,194), much lower than credit card offers, it will take some time before it can disrupt the cards market or wrest market share, analysts at Macquarie Research said.
Fintech firm MobiKwik sees BNPL business nearly doubling for the company in two years, in a country where hundreds of millions of people have little access to formal credit.
MobiKwik, which is among the top BNPL players in India and is backed by the Abu Dhabi Investment Authority, said income from the segment accounted for nearly a fifth of its 3.02-billion rupees revenue for the financial year ending March 31.
“Only 60-million to 70-million Indians have access to credit today, which means 93% of India has no access to credit,” said Upasana Taku, co-founder of the firm.
“It will become the fastest revenue driver for the business because there has been a 45X growth in BNPL transactions in the last two years. New user addition is very high; repeat rate and average ticket size is going up.”
As the Covid-19 pandemic sent more and more people towards online shopping, the demand for easy loans has driven more players to enter the BNPL market. Amazon joined the BNPL bandwagon in 2020 while home-grown payments firm BharatPe started its service in October.
“A very large population of millennials and young customers during the pandemic were looking for credit and to extend their budgets, because of different uncertainties in these times,” said Vikas Bansal, director of Amazon Pay India, explaining the newfound interest in BNPL.
To be sure, there are concerns that risk of defaults from BNPL customers with limited or no credit history could be higher even as some industry experts add that certain players may not be reporting accurate default details to credit bureaus.
Mumbai resident Divya Menon said she recently tried the BNPL option on an e-commerce website for an item costing less than $10. She said she found it so convenient that she’s now opting for it on multiple platforms.
“Once BNPL is activated, it is just a one-step process,” said Menon, who works in human resources at an IT services firm. “With cards it is a two-step process of keying in the security code and then the one-time password. This just feels more convenient. Plus, it’s like having an additional line of credit.”
Though BNPL is not the only credit option for Menon, it is for many new online shoppers in India where even small towns and villages are now served by companies such as Amazon and Walmart’s Flipkart.
Most payments apps that offer BNPL services need customers to provide government-verified information and bank details before they can use the service.
BNPL firm CASHe said Indians are now buying big after a record rise in coronavirus infections between April and May shut most activities.
“We are now seeing revenge demand in India,” CEO Yogi Sadana said. “Aided by the festival season, we are seeing a 25-30% uptick in demand in the BNPL segment” from 2020.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Business flourishing for India’s buy-now-pay-later industry
Mumbai — India’s buy-now-pay-later (BNPL) industry is booming and set to surge over tenfold within four years as tens of millions of online shoppers get lured by interest-free credit with fewer hassles, say market players.
Redseer estimates India’s BNPL market will rocket to $45bn-$50bn by 2026 from $3bn-$3.5bn now. The research firm also estimates that the number of BNPL users in the country may rise to 80-million to 100-million customers by then, from 10-million to 15-million now.
However, since the maximum credit being offered on BNPL is 100,000 rupees (R20,194), much lower than credit card offers, it will take some time before it can disrupt the cards market or wrest market share, analysts at Macquarie Research said.
Fintech firm MobiKwik sees BNPL business nearly doubling for the company in two years, in a country where hundreds of millions of people have little access to formal credit.
MobiKwik, which is among the top BNPL players in India and is backed by the Abu Dhabi Investment Authority, said income from the segment accounted for nearly a fifth of its 3.02-billion rupees revenue for the financial year ending March 31.
“Only 60-million to 70-million Indians have access to credit today, which means 93% of India has no access to credit,” said Upasana Taku, co-founder of the firm.
“It will become the fastest revenue driver for the business because there has been a 45X growth in BNPL transactions in the last two years. New user addition is very high; repeat rate and average ticket size is going up.”
As the Covid-19 pandemic sent more and more people towards online shopping, the demand for easy loans has driven more players to enter the BNPL market. Amazon joined the BNPL bandwagon in 2020 while home-grown payments firm BharatPe started its service in October.
“A very large population of millennials and young customers during the pandemic were looking for credit and to extend their budgets, because of different uncertainties in these times,” said Vikas Bansal, director of Amazon Pay India, explaining the newfound interest in BNPL.
To be sure, there are concerns that risk of defaults from BNPL customers with limited or no credit history could be higher even as some industry experts add that certain players may not be reporting accurate default details to credit bureaus.
Mumbai resident Divya Menon said she recently tried the BNPL option on an e-commerce website for an item costing less than $10. She said she found it so convenient that she’s now opting for it on multiple platforms.
“Once BNPL is activated, it is just a one-step process,” said Menon, who works in human resources at an IT services firm. “With cards it is a two-step process of keying in the security code and then the one-time password. This just feels more convenient. Plus, it’s like having an additional line of credit.”
Though BNPL is not the only credit option for Menon, it is for many new online shoppers in India where even small towns and villages are now served by companies such as Amazon and Walmart’s Flipkart.
Most payments apps that offer BNPL services need customers to provide government-verified information and bank details before they can use the service.
BNPL firm CASHe said Indians are now buying big after a record rise in coronavirus infections between April and May shut most activities.
“We are now seeing revenge demand in India,” CEO Yogi Sadana said. “Aided by the festival season, we are seeing a 25-30% uptick in demand in the BNPL segment” from 2020.
Reuters
Toxic smog at worst in years in Delhi after Diwali
India’s Congress party stands up for women in Uttar Pradesh
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.