The ‘
Buy Now Pay Later’ segment is seeing larger adoption across different geographies and product segments from earlier dominated by smartphone purchases on
BNPL mode.
On assessing the BNPL transactions on its Brand EMI platform, leading POS player Mswipe said they’re witnessing BNPL mechanism being used to purchase musical instruments, mechanization of kitchen, hair treatment, Mobiles, Consumer Durables, Education, Health, Furniture, Wellness and Luxury segments.
Leading digital consumer lender Zest Money on its platform saw the demand for credit in BNPL with 20% growth in women customer base with spends on Edtech and men splurging on fashion, high end smartphones, laptops, fitness watches, electric vehicles were driving the larger transactions.
Geographically, Zest Money saw a demand for BNPL across 18,921 pin codes with customers in Bengaluru looking for online electronics and fashion, Mumbai – Education & Travel, Delhi NCR- Fashion & Travel, Hyderabad – Offline Electronics & Personal Loans, Pune: Fashion & Education, Chennai: Education & offline-electronics.
Mswipe on its platform saw a unique trend with customers in Mumbai, Bengaluru & Delhi saw a growing use of BNPL for hair loss and thinning treatment and the average transaction size at Rs 43,000.
On the western part of the country M-swipe observe people are using BNPL to buy musical instruments like Guitar and Piano, whereas in the North and Eastern parts of India, BNPL is being used to BNPL for mechanisation of the kitchen with customers buying Chimney, Cooktops, Hobs, Built-in Oven, Cooking Range among others. Mswipe saw an average ticket size of INR 20, 000 for these products purchased on BNPL.
In the South, especially in cities of Chennai, Coimbatore and Erode in Tamil Nadu and Trivandrum, Ernakulam, Angamaly, Calicut and Kannur in Kerala, BNPL was used to purchase formal clothing.
Manish Patel, Founder and CEO, Mswipe said, “The insights reveal a fundamental shift in the behaviour of consumers both in terms of their lifestyle choices and their financing preferences. The growing EMI economy creates opportunities for small businesses that have not been using checkout finance as an incentive for their customers up until now.
According to Zest Money, the BNPL option offers greater flexibility to spread the cost and has noticed that the average ticket size for BNPL is higher and it plays a crucial role in reviving consumer demand, especially for large ticket products. It also observed that the highest volume of premium products were purchased on Fridays. High end smartphones, laptops, large appliances, and fitness watches drove demand in the category.
Lizzie Chapman, CEO and Co-Founder ZestMoney said, “2020 will be remembered as one of the most pivotal years in the adoption of Buy Now, Pay Later in India. We saw an increased trend of digitally savvy customers who prefer transparent financing options like BNPL over unfair and hidden fees associated with traditional products. The category is poised for massive growth this year as the consumer habit is here to stay. Consumers are clearly loving the all-digital experience for credit. We strongly feel India will emerge as the largest market for BNPL and will leapfrog credit cards entirely.”
Zest Money is looking to ramp up their BNPL presence to 400,000 touch points in 2021 from current 15,000.
The Other Side
On a different note, BNPL has grown exponentially in United Kingdom . UK’s Financial Conduct Authority is set to regulate the BNPL segment with new rules as fears mount over the growing debt burden for cash-strapped consumers and shoppers.
The use of BNPL has grown four times in 2020 and is now at £2.7 billion in UK over 5 million people using the product since the onset of Covid-19 pandemic. Early trends show that consumers are taking on debt which they cannot afford.
The exponential growth of BNPL has given consumers a significant alternative to a more expensive credit as per the FCA but it also has “significant potential for consumer harm”.
According to FCA one in ten customer of a major bank using BNPL are already failing to clear their dues.
“Changes are urgently need to bring BNPL into regulation to protect consumers to ensure that there is a secure provision of debt advice to help all those who may need it and to maintain a sustained regulatory response to the pandemic,” states Chritopher Woolard, chairing a review into the unsecured credit market at the FCA.