Buy Now Pay Later is the flavour of festive season for top Internet firms
Top consumer internet companies, including Flipkart, Amazon, Paytm and Byju’s, are betting big on India’s nascent, yet fast-growing Buy-Now Pay-Later (BNPL) segment ahead of the upcoming festive season.
The premise is simple: millions of Indians who took to online shopping amid the Covid-19 pandemic – many without credit cards – are opting for interest-free credit at checkout points on online platforms, and facilitators – mostly fintech firms such as Zest Money, Simpl, Lazypay, Pine Labs and Capital Float — are willing to underwrite the risk.
Industry insiders say the size of India’s annualised BNPL market in gross transaction value terms has grown to around $1.5 billion-$2 billion in less than 18 months, from just a few million dollars in 2019, aided by the behavioural change induced among shoppers following the virus outbreak.
Flipkart is facilitating such transactions through subsidiary Flipkart Advanz, while Amazon has partnered with non-banking financial company Capital Float. Paytm is offering BNPL as part of its Postpaid service in a tie-up with Aditya Birla Finance. In the ed-tech space, Byju’s and Unacademy have partnered with Lazypay and Capital Float, respectively.
Meanwhile, private sector banks themselves are experimenting in this segment.
ICICI Bank is offering pay-later services on its app, while Axis Bank-owned Freecharge has also forayed into the space.
According to industry tracker Tracxn, there are 33 BNPL-focussed startups in India, a mix of fintech NBFCs and payment service providers functioning as platform facilitators.
Up to July, the sector had seen a total funding inflow of around $17.7 million in India, against $11.6 million, $48.5 million, and $19.1 million worth total funding in 2020, 2019 and 2018, respectively, as per Tracxn data.