Understanding the Concept of BNPL in Fintech
Buy Now Pay Later (BNPL) is a payment method to shop at various online merchants without paying anything upfront. One doesn’t need plastic money to use this payment method but can simply take a Buy Now Pay Later loan and repay it later in EMIs.
The BNPL market in India is set to grow from $3–3.5 billion in 2021 to $45–50 billion by 2026. The number of BNPL users may go up to 80–100 million by 2026 from 10–15 million in 2021. The transparency, flexibility and ease of use of this payment method are leading to its increasing popularity.
How Does BNPL Work?
You need a Pay Later loan to avail this payment option. You can apply for the loan online on a fintech company’s app on your Android or iOS device. You can choose a loan amount of ₹1,000-₹60,000 and a tenure of 90 days or 180 days. There are minimal to zero interest charges and a low processing fee ranging from ₹200 to ₹600.
You need to provide your KYC and other necessary details and upload some basic documents to apply for the loan. Once the documents are digitally verified, choose a BNPL loan for a specific merchant. Suppose that you select a Flipkart Pay Later Loan. Once approved, it’s credited as your Flipkart gift card. You can redeem it to shop for any product at this merchant. Then you can repay the loan over the chosen tenure using an auto-debit facility, UPI, NEFT or IMPS.
Benefits of BNPL Loans
Whether your shopping list is long or short and you wish to buy small-ticket or big-ticket items, you can easily choose a suitable loan amount to finance your purchases. You can use all the funds in one go or parts and even avail the ongoing offers and discounts.
This payment method is better than credit cards in many ways. Not all credit card bills can be paid in EMIs. Even if that’s allowed, you usually have to spend above a certain limit to avail this facility. However, you can pay the whole BNPL loan amount in EMIs. Also, you need to maintain a certain credit utilisation ratio on a credit card. There’s no limit to fund usage of a Pay Later loan. Credit cards come with various charges like joining fees, annual maintenance fees, interest, over-the-limit fees and so on. Buy Now Pay Later loans only charge a low interest and processing fee.
A leading fintech company assesses your creditworthiness using a modern credit rating system called Social Loan Quotient. It works using machine learning, big data analytics and artificial intelligence and is based on unconventional factors like your social media footprint and smartphone metadata along with the credit score. Other simple factors include your educational qualifications, salary and career experience.
Now that you see the benefits of this modern payment method, opt for it whenever you need to shop at online merchants like Flipkart and pay later in easy EMIs.Android, iOS, BNPL, Flipkart Pay Later, Social Loan Quotient, pay later
