Amazon Pay, Paytm and Flipkart remain influential in ecommerce
India’s Buy Now Pay Later (BNPL) payment market is expected to grow by 22.5% on annual basis to reach US$30.45 billion in 2026, following on to 34.2% CAGR achieved in 2022-25, according to an industry report.
“This upward trajectory is expected to continue, with the market forecast to grow at a CAGR of 15.5% from 2026-2031. By the end of 2031, the BNPL sector is projected to expand from its 2025 value of US$24.86 billion to approximately US$62.61 billion,” said the “India Buy Now Pay Later Business and Investment Opportunities Databook,” which is being offered by ResearchAndMarkets.com since 28 Jan.
Competition is expected to consolidate around a smaller number of regulated lenders powering pay-later options across ecommerce, wallets and UPI. Embedded credit within large payment ecosystems will overshadow standalone BNPL branding. Banks will deepen UPI credit line penetration, while fintechs operate primarily as origination or customer experience layers.
Amazon Pay (with Capital Float), Paytm-branded postpaid models (via bank/NBFC partners), and Flipkart‘s credit ecosystem remain influential in ecommerce-driven BNPL. Banks such as ICICI Bank, HDFC Bank, Axis Bank and SBI dominate card-EMI and UPI-linked credit propositions, while fintechs like LazyPay, Simpl and Kissht continue to operate, though at reduced scale or with revised constructs.
New entrants in 2024-25 are mostly bank-anchored offerings embedded within UPI apps or ecommerce apps rather than standalone BNPL startups, reflecting regulatory expectations. Pure-play BNPL launches have been limited following ZestMoney’s exit announcements and the discontinuation of wallet-linked pay-later variants.
UPI’s ubiquity of over 16.5 billion transactions in a single month in late 2024 makes it the natural front-end for any consumer payment proposition. Credit products bolted onto UPI gain instant merchant acceptance and consumer familiarity.
The Indian BNPL market has already seen a correction: high-profile startups such as ZestMoney announced shutdown plans in 2023-24 after facing funding and regulatory headwinds, while other products (e.g., certain wallet-linked BNPL cards) have been discontinued or scaled back.
At the same time, large ecommerce, wallet, and PSP players continue to offer pay-later options in partnership with banks and NBFCs (e.g., Amazon Pay Later via Capital Float, Paytm Postpaid-type offerings, card-EMI flows through PSPs), but with tighter compliance and underwriting aligned with the new digital lending regime. Newer entrants in 2024-25 are less likely to position themselves as pure BNPL providers and more as embedded-credit platforms or lending-as-a-service partners for merchants and payment gateways.
Funding conditions for loss-making consumer-lending models have tightened, pushing fintechs to prioritise unit economics and stable bank/NBFC partnerships over standalone growth. Regulatory constraints on wallet-based models and the emphasis on regulated entities as lenders of record naturally favour bank- or NBFC-backed BNPL, whether at checkout or via UPI/card rails. Large merchants and PSPs prefer dealing with fewer, well-regulated lending partners that can scale across categories, thereby reducing the room for many small, niche BNPL startups.
Key activities include banks expanding UPI-based credit lines, partnerships between merchants and regulated lenders, for instant, EMIs, and fintech-bank tie-ups to realign disbursement flows with RBI rules. ICICI Bank’s discontinuation of its PayLater credit line on UPI illustrates a broader industry shift toward portfolio rationalisation. No major BNPL-specific M&A occurred in the past year, though several fintechs have scaled down or restructured operations after regulatory tightening, said the report. Fiinews.com
