BNPL apps have become immensely popular throughout the country and with good reason! The buy now pay later concept has caught on immensely and the festive season has spurred swifter acceleration of the same. Reports indicate how leading BNPL apps including LazyPay and others are seeing festive demand go up for short-term credit and monthly EMI offerings. 

More buyers are now choosing to pay through BNPL mechanisms or EMI plans. The festive season this year was the first such regular one after the pandemic disrupted normal life over the last couple of years. BNPL spending has gone up by approximately 50-60% already in the last week of September as compared to the same period in 2021. This has been largely fueled by leading fintech, banks, and payment gateways. 

Experts are already anticipating 3-4 times higher disbursements in the BNPL category for the festive season. Fintech startups have also been able to tap consumer demand in this period, by upgrading their business models, terms and conditions, and operational aspects in order to adhere to RBI guidelines. They are now offering BNPL solutions through personal credit for the short term, tapping their partnerships with digital merchants. 

Key insights regarding these market trends 

Grant Thornton has already reported credit going up by 50% with new leads being generated from Tier II, III, and IV cities in the country. There has also been pent-up demand throughout the pandemic which has now manifested itself in the growing popularity of BNPL apps and their offerings. Credit demand has naturally gone up due to higher consumption levels this festive season. Most industry players report a majority of demand for credit being generated by non-metro cities, with average customer age groups being around 26-34 years. Gen-Z and millennial customers are already the biggest categories for this segment, with average spending being around Rs. 14-15,000 for several other fintech platforms.

LazyPay, for instance, has personal loans and pay later solutions available through SBM Bank and PayU Finance, which are its NBFC partners. It has also tied up with several eCommerce merchants, including Dunzo, Zomato, and Licious. The company has reported spending going up by 5% for August 2022 (month-on-month), while also highlighting more than 90% of total yearly growth with regard to the spending between August 2021-2022. Millennials continue to drive a majority of loans with smaller ticket sizes, especially for taking care of festive requirements. Lending platforms have seen the growth of even 97% for these loans with average loan sizes of around Rs. 30-40,000. 

LazyPay has 30-40-year-old customers as its main driving force. Digital payments are gaining ground over credit cards while customers are also tapping into available special offers across banks and other fintech platforms for the festive season. Some of the top categories in the BNPL segment include consumer electronics purchases (inclusive of smartphones), travel, and home furnishings and items. Most customers are LazyPay, for instance, got credit for professional and entertainment services, along with urban transportation. These categories had stellar growth of 28%, 36%, and 19% respectively. 

How BNPL is booming and what the future looks like 

Many fintech platforms saw huge demand for BNPL and other short-term credit arising from the need to purchase mobile phones, bigger home appliances, accessories, and fashion products during the festive period. Both men and women are equally driving transactions in the space according to most companies. Personal care and travel continue to remain major choices for customers as well. BNPL is one segment that is already posting growth of 65% (year on year) as per industry reports. 

In India alone, the market should touch $45-50 billion by the year 2026, as compared to $3-3.5 billion currently, based on estimates by Redseer. Digital lending has already posted exponential growth while enabling digital loans of $2.2 billion for FY20-22 according to reports. While there was some short-term disruption due to the RBI guidelines, fintech players have adapted to the same and are now cashing in on growing consumer demand. Over the next few years, BNPL should touch bigger heights along with digital lending overall, with more Indian consumers getting used to the format and experiencing its benefits first-hand. This directly relates to apps like LazyPay that offer potential users an easy path to downloading the app and starting operations, along with an impressive associated merchant list, many of who offer a variety of offers on purchases through the app.  

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