Fintech firms are experiencing huge demand for BNPL services
India’s Buy Now Pay Later (BNPL) network is expected to grow steadily at a 12.2% CAGR during 2023-2028, according to a ResearchAndMarkets report.
The BNPL Gross Merchandise Value in the country will increase from US$11,628.8 million in 2022 to reach US$25,387.2 million by 2028.
It is set to grow by 22.9% on an annual basis to reach US$14,289.4 million in 2023, said the report “India Buy Now Pay Later Business and Investment Opportunities Databook”.
The BNPL payment industry in India has recorded strong growth over the last four quarters, supported by increased ecommerce penetration. Medium to long term growth story of BNPL industry in India remains strong, said the report on 14 Feb 2023.
The buy now pay later space has grown significantly amid the growing traction for flexible payment methods among consumers in Tier II and Tier III cities of India.
The trend is expected to further accelerate over the next three to four years. The payment method has resonated with consumers across age groups and classes and has become the default payment choice for many in the country.
Despite regulatory hiccups, consumer BNPL spending is expected to grow significantly in Q4 2022, largely due to the year-end festive and holiday season.
The payment method is expected to increase its penetration in both the online as well as offline market, as consumers turn to flexible payment options amid rising inflation and cost of living.
Fintech firms are experiencing huge demand for BNPL services for both online and offline purchases, according to the report.
The Reserve Bank of India announced a slew of regulatory measures that have had a direct impact on the operations of BNPL players in India.
Despite the regulatory hiccups, the sector is projected to record strong growth in Q4 2022, amid the rising demand for consumers.
LazyPay, ZestMoney, and KreditBee are among the many BNPL providers that have experienced high demand for their services in Q4 2022.
Consumers, in increasing numbers, have resorted to the BNPL payment method to fund their festive-related purchases, which has significantly driven the volume in the country.
For KreditBee, the loan disbursement increased by more than 100% during the festive season in 2022, compared to 2021. Much of the demand for BNPL services was driven by consumers in Tier II and III cities in India.
The demand was not only evident for online purchases.
Pine Labs, one of the leading fintech firms in the country, has witnessed a strong surge in the usage of BNPL services for offline payments.
The firm had projected BNPL transactions worth Rs.50 billion in October 2022 alone. This represents a growth of 100% compared to any month on average.
To capitalize on the growing demand, the firm also announced a tie-up with 100,000 stores for BNPL services in October 2022.
From the short to medium-term perspective, Pine Labs is expected to boost its presence in Tier III and IV cities across India.
While the payment method has been under growing scrutiny from the central bank, the demand has continued to increase in India, and the publisher expects the trend to further continue over the next three to four years.
Rising inflation and cost of living will further support consumer adoption in India.
Providers are focusing on the travel industry to drive their BNPL transaction volume and value in India.
After two years of pandemic-induced restrictions, travel activities have posted a strong rebound in the Indian market. To capitalize on the growing tourism and travel demand, BNPL players are forging strategic alliances with travel-based platforms in India.
In October 2022, CASHe, an AI-driven financial wellness platform, announced that the firm had entered into a strategic alliance with IRCTC, the online travel platform to book train tickets.
Under the collaboration, the two firms have launched a travel now pay later service, thereby allowing travellers to repay their ticket purchase in installments.
There is a strong demand for BNPL in the travel segment. SanKash, the firm that focuses on offering travel-related BNPL service, announced that the firm recorded a 102% increase in travel loan amount in Q2 FY23 compared to Q1 FY23.
The majority of the demand has been driven by consumers in the age group of 20-30.
With the demand expected to further increase in Q3 and Q4 FY23, due to year-end holiday trends, the publisher expects more firms to record strong growth in the travel segment. This will also drive more strategic alliances in the Indian market from the short to medium-term perspective.
The report covers: Simpl, ZestMoney, LazyPay, Capital Float, PineLabs, Paytm Postpaid, OlaMoney Postpaid, Amazon Pay Later and Flipkart Pay Later. fiinews.com
