How will India Buy Now Pay Later in the Future?

A question that one often gets asked in the professional world is to site a detailed description of the future. What it holds in store for companies, sectors, industries, the country as a whole, and the opportunities and threats that come with it. With the world moving into an era of digitization, it is significantly evident from statistics that India has been leading the charge with a wider percentage of our population laudatory of the change. India’s internet penetration rate stood at 47 per cent at the beginning of the calendar year 2022. Capitalizing on this growth will most certainly propel this country towards achieving higher levels of prosperity and standard of living. The adoption of digital technology has opened up a new front for the fintech industry.

With the stellar growth witnessed in the eCommerce sector, digital payments in the form of Buy Now Pay Later options have been gaining significant traction. Although the BNPL services have been around for a considerable period of time in the past, it is the pandemic that has acted as a catalyst in propelling the growth of this industry in India. According to IBEF the popularity of Buy Now Pay Later options has increased by six-fold or 600% in 2021. One of the most important variables contributing to this rapid rate of growth is the shift in the mindset of the citizens of our country. Going from being conservative and savings-focused to a consumption-focused mindset.

Traditional lending by banks has been prevalent in the economy for decades. A borrower would have to check all the boxes in the criteria list to avail of a loan. A good credit score, low risk of default, or some collateral would be mandatory and a top priority for the banks to extend credit. The above criteria could be fulfilled by very few leaving a huge gap in the credit market of India. Today the fintech industry has been successful in identifying this gap and has made a constant effort to try and bridge the consumer with credit through the use of technology. This has created an enormous opportunity for consumers. The easy availability of credit has been a boon to this country. People can now pursue a plethora of activities gain access to better services and aspire to buy quality products that were previously out of reach.

The size of this market has been on a stellar rise. According to the Q4 2021 BNPL survey, the BNPL services in India are expected to reach a market size of 6927.4 million USD by the end of 2022 with an expected growth rate of 89.5% on an annual basis. The projected BNPL adoption in the country from 2022 to 2028 is forecasted to record a growth of 54.3%. The BNPL disbursals also showed an unprecedented growth of 100% during the festive season in Diwali 2021. This clearly marks a shift in the spending habits of the Indian consumer.

It is without a doubt that India still has a long way to go in terms of credit penetration. India’s household debt as a percentage of nominal GDP in March 2021 was a mere 14.5%. This compares to a ratio of more than 50% in other emerging markets and developed nations. At Dili, we believe that a significant portion of this market will be addressed by the growing aspirations of the citizens of our country. Credit products like the Buy Now Pay Later will help fund these aspirations and bridge the gap in terms of opportunities in a world where income inequality exists at large.  We as a player in this ecosystem stand with fellow Indians and provide them with the required financing to accomplish their goals and fund their dreams. It does not take a visionary to realise that this industry is poised for growth similar to what happened in the developed nations of the world. We can stick our neck out and unequivocally say that the Buy Now Pay Later system of payments will be considered the go-to and preferred mode of payment in the future.

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