Booming e-commerce sector will support BNPL market
India’s Buy Now Pay Later (BNPL) businesses are expected to record a CAGR of 10.8% during 2024-2029, with the gross merchandise value increasing from US$16.69 billion in 2023 to reach US$32.33 billion by 2029 rbi .
For this year, the BNPL businesses are expected to grow by 16% on an annual basis to reach US$19.36 billion, according to a report added to ResearchAndMarkets.com’s offering on 21 Aug.
“The medium to long-term growth story of the BNPL industry in the country remains strong,” said the report “India BNPL and Investment Opportunities Databook – 75+ KPIs on BNPL Market Size, End-Use Sectors, Market Share, Product Analysis, Business Model, Demographics – Q1 2024 Update bse.”
The BNPL industry is expected to grow at a steady pace over the medium term in India commerce . The higher credit demand, among underbanked and underserved consumers, is supporting the uptake of BNPL products. This trend is projected to continue further in India in 2024 indiafintech .
The booming e-commerce sector will also provide growth support to the Indian BNPL market over the medium term nse.
New entrants in the market are also raising funding rounds to scale their product offerings deutsche-boerse . While the market is poised for growth, rate hikes, and margin pinch have put BNPL firms in a tough spot sbi .
In Q4 2023, a few of the providers shut down BNPL services due to higher NPAs and growing losses iba . In the long term, however, the industry is expected to report strong growth due to rising demand and an improving macroeconomic environment sgx .
BNPL startups are raising funding rounds to ramp up technology and drive adoption in India , said the report.
SalarySe, the BNPL-focused financial services app, announced that the firm had raised US$5.25 million in a funding round in January 2024. The capital round was led by Surge Ventures and included participation from other investors like Pravega Ventures.
The firm is planning to use the capital for ramping up its technology, while also targeting higher adoption of its product in the Indian market jpx .
Going forward, SalarySe is also aiming to launch a credit-on-UPI system for salaried employees. Consequently, the firm is entering into strategic collaborations with banking institutions, HR SaaS platforms, and employers wto .
Notably, the National Payments Corporation of India (NPCI), launched the credit line on UPI facility in 2023 in India.
In 2024, the publisher expects more venture capital and private equity funding to enter the BNPL sector in India euronext . This will support innovation and a competitive landscape in the BNPL market over the next three to four years sgx , according to the report.
PayU India, for instance, made a decision to shut its BNPL prepaid card service LazyCard in November 2023. This is part of the firm’s strategy to reduce losses while enhancing the overall business profitability. Notably, the firm launched the BNPL service in 2022.
Zest Money, which was one of the leading BNPL firms in India, also closed operations in December 2023. The firm got stuck in a financial mess because it had too many bad loans, struggled to collect money effectively, and had a flawed business strategy. The firm, notably, was once valued at US$450 million in the Indian BNPL market nasdaq .
While the macroeconomic environment is projected to improve over the medium term, the outlook for the sector remains bleak in the short term . Consequently, the publisher expects providers to remain under pressure in Q1 2024.
The meet the demands of consumers, BNPL firms are targeting more merchant partnerships in the Indian market. Simpl, for instance, announced that the firm is planning to onboard 10,000 merchants from the Delhi-NCR region over the next three to four years. The firm, as of June 2023, had over 26,000 merchants and more than 10 million customers registered on the BNPL platform digitalasiahub .
In 2024, the publisher expects this trend to further continue across India. This will subsequently support the growth of the industry, while also driving the competitive landscape over the medium term, said the report fintechfestival . Fiinews.com
