Buy Now Pay Later

BUY NOW PAY LATER (BNPL)

Buy now, pay later is a sort of short-term financing that allows you to pay for a product in installments over a set period.

BNPL Payment Option

The BNPL method, also known as ‘Buy Now Pay Later’, is a payment method that allows you to purchase without the requirement of paying out of cash. In most cases, you join up with a firm that provides this service and they pay the seller (on your behalf) when you make a purchase.

However, after the lender makes a payment on your behalf, you must return the money within a certain time frame. You have the option of paying it in one lump sum or no-cost equal monthly installments (EMI). If you do not pay the loan within the specified repayment period, the lender will be required to charge you interest. This might have a significant impact on your credit score. BNPL arrangements are becoming more popular as a method of payment, particularly when shopping online.

Buy Now Pay Later Apps in India

A number of Buy-Now-Pay-Later (BNPL) mobile applications have been introduced to the Indian market over the last few years. They function similar to credit cards, in that they give users an immediate credit line that can be used to pay for goods or services, such as electric bills, meals, and even shopping. Users can make use of this method to pay for their everyday needs quickly and easily without worrying about running out of cash.

As per market experts, the Buy-Now-Pay-Later (BNPL) market is flourishing and expected to expand tenfold over about the next four years when hundreds of millions of internet buyers are lured by interest-free loans that require less hassle. While Buy-Now-Pay-Later services have existed for a long time, the worldwide pandemic has increased the acceptance and expansion of the BNPL industry in India. BNPL is likely to upset the payments business in India, which has over a billion consumers and is a big credit-averse country. The need for easy loans has led more companies to join the BNPL market. Amazon joined the lobby in 2020, and the local payment platform Bharatpe also joined in 2021. The covid-19 outbreak led more shoppers to shop online.

Furthermore, as the BNPL market in India continues to grow strongly in the next quarters, more multinational corporations are expected to grow their presence in the country. From a shorter to longer-term perspective, this will bring about more strategic partnerships, mergers, and acquisitions.

Best BNPL Apps in India

Take a look at some of India’s best buy now pay later apps.

1. Paytm Postpaid

In India, Paytm Postpaid is the leading market player within the Fintech Peer group. It was initially designed to allow daily transactions via mobile phone with an electronic wallet. They entered into the payment bank system, a new banking system designed by the RBI and later, in the year 2015. Paytm postpaid is only used to pay from specific merchant websites or stores that accept payments via Paytm platforms regardless of whether they are offline or online. You can receive credit up to 60,000 rupees without interest for 30 days. The Paytm postpaid service is completely digital.

2. Lazy Pay

Through the LazyPay app, you are able to get a personal loan of up to 1 lakh rupees. To determine your credit limit, all you have to provide is your basic details. One of the major advantages is that you are able to request personal loans of as little as Rs. 10,000 or Rs. 20,000 or up to your credit limit. The LazyPay technology platform is owned by PayU Finance India Private Limited, a systemically significant non-banking finance organization registered with the Reserve Bank of India.

3 . Postpe

Postpe is a new shopping and payment site that lets you buy now and pay later on anything. In the peer group, it is the newest BNPL app. It allows you to keep track of your monthly costs. Postpe is owned by Bharatpe, an Indian fintech company focused on small merchants and retail stores in India. Bharatpe is the nation’s market leader in providing QR code for UPI payments.

4. Simpl

If you’ve ever thought of a one-click method of payment for any of your transactions, then Simpl is the right app for you. Simpl promises to make each type of bill payment speedier and more convenient. It takes just a few seconds to sign up and your credit limits grow with the use of this Buy Now Pay Later app. This is because the app determines your credit score based on your transaction history. If you make regular payments within a couple of weeks, no interest is charged, just like any other payment option.

5. Amazon Pay Later

Amazon’s pay later option is available in India through two major loan partners, IDFC First Bank, and Capital Float. It offers its users a zero-interest credit line based on their credit history. You can make purchases on the site using the Amazon Pay Later option. You may also pay for your utility bills like water, energy, cell phone bills, and groceries with this interest-free credit option. The money can be paid on the 5th of next month or through EMIs over 3 to 12 months. However, you must set up auto payments, which means the app will deduct the amount from your bank account every month. The Pay Later Option is available under the Amazon Pay section of the Amazon India app. Amazon Pay Later has been renamed after Amazon Pay EMI. It’s a painless approach to get quick credit from Amazon via the digital onboarding process. This is a one-time setup process that should not take more than 2 minutes and does not require your credit card details.

6. Flipkart Pay Later

It is a credit facility provided by the e-commerce giant to its clients through its app. There is a 70,000 rupee credit limit. On its platform, it allows clients to avoid using credit cards. Flipkart Pay later allows customers to prevent delays during payment Procedures on its platform. Customers who utilize the service can buy products and pay for them before the 5th of the following month without incurring any extra fees. Keeping track of your bills is simple with Flipkart Pay.

How does BNPL Works?

The only difference between BNPL service providers is their operational model. Here’s how it normally works:

Step IPurchase at a participating store.
Step IISelect the ‘Buy Now Pay Later’ option.
Step IIIPay a small down payment on the total purchase price.
Step IVThe remaining balance will be deducted in a series of interest-free EMI’s.
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Under the Purchase Now Pay Later option, you can make EMI payments through bank transfer, cheque, credit card, or direct debit from bank accounts. Interest is rarely charged on these plans. It is often easier to obtain than traditional credit cards or lines of credit. BNPL does not affect your credit score in most cases, but the late payment or inability to pay can hurt your credit score.

Take away from Buy Now Pay Later (BNPL)

The expression “Buy Now Pay Later” refers to point-of-sale installment loans that permit customers to purchase items immediately and pay for them later. Consumers usually pay a part of the purchase cost at the time of purchase and pay the rest amount in a certain number of installments.

Upside and Downside to Buy Now, Pay Later (BNPL)

S No UpsideDownside
1You can get an instant credit facility to pay for your purchases over time without incurring any interest charges. Like conventional Financing methods, BNPL won’t help you establish or improve your credit as it is not likely to be reported to the credit rating agencies. On the other hand, if you have defaulted on the payments of BNPL loans then it might have a negative impact on your credit score.
2Even if you’ve been rejected for loans previously due to a low credit rating, then you may be eligible for the BNPL credit facility. The operational functionality of BNPL loans is more likely similar to credit cards but you will lose out on credit card advantages such as cashback and reward points.
3BNPL loans aren’t likely to have an effect on your CIBIL credit score as they’re typical of short duration and small loan amounts, not required to be reported to credit bureaus. Returning an item, you purchased through BNPL can be a hassle. Upon returning an item, you would expect a prompt refund from the seller but it may take some time for the retailer/ seller to notify the BNPL lender about the return. In the meantime, you may still be required to continue making the payments of your BNPL loan. If you fail to make the payment, then the installment may be marked as overdue and result in penal interest along with a negative impact on your credit score.
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Closure

The idea behind the Buy Now, Pay Later option is that consumers can make instant purchases without having any worries about the cash and get some extra time to pay for it without paying extra interest. If you aren’t able or don’t want to make a payment for your purchase in one go, then Buy Now and Pay Later financing could be the right option for you. This loan extends you to a credit facility without charging any high-interest rates, but they come with a repayment schedule so you don’t end up with a mound of unpaid debt. If you are considering whether the payments are affordable or the penalties you might face if you can’t make them on time, then always read the terms and conditions of your Buy Now and Pay Later finances carefully to ensure that you are fully aware of the terms to which you are consenting.

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