THE BUY-NOW-PAY-LATER MODEL IS HERE TO STAY, AT LEAST THESE ECOMMERCE GIANTS THINK SO

The pandemic has seen major shifts in the market and one among the many are payment methods. In the pre-COVID period, consumers opted to pay for over 60% eCommerce transactions in cash (Cash on Delivery), but after the pandemic, it is safe to quote that the vast majority is opting for digital transactions. This digitalisation has led to new developments in the eCommerce marketplace. With various companies trying to woo consumers, a number of options are being offered to enhance the buying experience of consumers and make it more convenient.

One such option that is taking this industry by storm is the Buy-now-pay-later payment method. This feature allows the consumer to purchase the service or product at that instant and as the name suggests pay for it later or in installments. Further delving into the topic, a few companies take an interest in the cost of the product while others take the principle as credit. The credit from Buy-now-pay-later service is essentially the same as a credit in a credit card, but with a digitalised disguise.

Various Indian companies have jumped on the BNPL wagon, with an attempt to have an edge over their competitors.

FLIPKART

Flipkart, an eCommerce heavyweight has also featured the buy-now-pay-later scheme. Although, the working of this service is still in the beta stage, and is only available to certain android users. The working of it allows customers to purchase products up to a predefined credit limit without having to pay immediately. However, the outstanding amount needs to be paid by the 10th of the next month.

“Everybody loves shopping, and everybody loves shopping on Flipkart. But, scrambling for cash for COD purchase or getting out your debit or credit cards for online payments and typing in OTPs every time you make a purchase can be a hassle. If only there was a simpler way to make all this easier. Well, now, there is.”

Flipkart

Features:

  • Instant credit up to ₹5,000
  • 30-second application process
  • One-click checkout
  • Zero cost up to 35 days
  • Single bill for all purchases

With the festive season fast approaching, the BNPL option may just be the feature that lets people let loose and shop to their heart’s content.

AMAZON

eCommerce giant, Amazon, has also launched a pay later feature to its Indian customers. Under these payment options, customers can avail credit with zero interest rates on any listed products. The customers are provided with an option to repay the amount in monthly installments up to 12 months. However, there are various requirements in order for a person to avail of Amazon’s pay later option including being 23 years old and above, providing valid identification along with their PAN card, bank account number, etc.

Key Benefits:

  • Get an instant decision on your credit limit by the lender.
  • Credit card details not required.
  • No processing or cancellation fee.
  • No pre-closure charges.
  • Seamless checkout on Amazon.in using Amazon Pay Later payment option.
  • Simplified tracking of expenses and repayments on the EMI specific dashboard

The Pay Later feature is also a mobile-only experience that enables a smooth buying experience on the app.

PAYU

LazyUPI, a product offered by PayU Finance, is also following the Buy-now-pay-later model but has integrated it with a UPI. This unique digital service works on the same lines and offers credit across online and offline platforms. It allows customers to make part-repayments and has a minimum amount due along with conventional interest rates. These services have provided opportunities for start-ups to model around the buy-now-pay-later option and have given a fresh sense of innovation to mobile wallet services and eCommerce platforms. Various eCommerce platforms including  Big Basket, Myntra, MakeMyTrip, etc, have integrated this service into their sites.

Key Benefits:

  • One tap payment
  • Settle payments every 15 days
  • Repay with EMI
  • Integrated across 250+ sites

The buy-now-pay-later concept in layman terms is similar to that of a credit card. However credit cards too are evolving into the BNPL model, as it fits better with millennial consumers that are looking for convenience and affordability. Credit cards offer high rates of interest and low transparency, but with few eCommerce platforms offering a zero-interest-rate and a long payback period, one can certainly understand the rave behind this service. 

While BNPL offers convenience consumers should look out and align themselves with certain habits to ensure maximum efficiency:

  • Note the limit and have only one BNPL account at a time
  • Budgeting needs to be made important to avail the BNPL option
  • Be committed to repaying the companies to avoid interests

The Buy-now-pay-later model is not a new concept and can be compared with the Indian Khata system, where customers were allowed to pay the entire bill at one-go which was typically towards the end of the month. This age-old concept was given a digital spin and the buy-now-pay-later model was created. With the disruptions and numerous opportunities that lie ahead, brands need to keep an eye out for this service and invest to integrate it with their current functioning.

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