Buy now pay later (BNPL) is emerging as India's fastest-growing e-commerce online payment. An alternative to credit cards, which works somewhat in a similar way, it allows borrowers to keep buying the stuff they need and pay at a later date.
However, it’s crucial to note that BNPL may also land borrowers in debt if not used properly. When compared to credit cards, BNPL is easy to get.
Explaining this, Madhusudanan R, co-founder at M2P Fintech tells that banks offering credit cards generally have to ensure that people with provable creditworthiness are only enrolled thereby excluding many from availing the benefits.
On the other hand, BNPL is more accessible to consumers.
Amit Jangir, Cofounder - Partnerships and BD at Karbon Card seconds Madhusudanan's views and added that BNPL allows more consumers in the market to get access to credit.
Talking about Indians in particular, Tushar Aggarwal, CEO and founder, Stashfin points out that people are quite culturally familiar with the concept of BNPLs.
"We've all engaged in it with our local stores. It's why BNPLs could work well for the Indian market much better than credit cards ever will - with no interest, transparent processes, and instant settlements. We're all aware of the shortcomings on credit cards that are often opaque, expensive, and more trouble than they're worth," Aggarwal stresses.
Aggarwal further believes that modern innovations in space today offer all this and much more, giving BNPL a clear edge over credit cards.
"With BNPL, repayments are significantly more flexible and the hassles of documentation and processing have all but faded away. For the new India, BNPLs are a logical evolution of financial culture over credit cards," he says.
Additionally, as customers are not entering the card or bank details on every e-commerce payment portal with BNPL, they are not prone to phishing or account hacking too, therefore it adds an additional layer of security.
However, it also makes sense to note that credit cards always offer more convenience given there are no limitations on its use case.
To conclude, it's important to understand that any kind of credit is good only until the consumer pays in time. Trouble starts when the payment is delayed. Users may have to shell out interest and other charges on paying late.
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First Published: IST