India Buy Now Pay Later Business and Investment Opportunities Databook - 90+ KPIs on BNPL Market Size, End-Use Sectors, Market Share, Product Analysis, Business Model, Demographics - Q1 2026 Update

Key Trends and Drivers

Tightening digital-lending rules reshapes BNPL product design

• BNPL in India is being firmly pulled into the formal credit and digital lending framework. The RBI’s Digital Lending Directions, 2025 consolidate earlier circulars and put all regulated entities and their digital lending apps under a single rulebook covering onboarding, KFS (key fact statements), fund flows, data use and grievance redress.
• Earlier actions, such as the prohibition on loading prepaid wallets with credit lines and the clarification that PPIs cannot be used as pass-through BNPL instruments, have already forced wallet-based “pay later” models (e.g., some card-on-wallet BNPL propositions) to shut down or pivot. Large players are reconfiguring. ICICI Bank has discontinued its PayLater credit line on UPI for all customers in 2025, directing users back to other products, a concrete example of banks pruning BNPL-style offerings that do not sit comfortably with evolving rules.
• Rapid growth in app-based small-ticket credit and rising consumer complaints about harassment, opaque pricing, and data misuse pushed regulators and the government to treat digital lending, including BNPL, as part of the mainstream credit system rather than as a payments “feature”.
• RBI’s focus is now on clear lender accountability (the regulated entity on the hook for everything the fintech partner does), standardised disclosures, and direct bank-to-bank fund flows, which make one-click wallet-style BNPL harder to run without full regulatory compliance.
• BNPL products that survive will increasingly resemble regulated credit lines or short-tenure personal loans with clear KYC, bureau reporting and structured collections; “light touch” or non-transparent variants are likely to shrink. Larger banks and NBFCs will be favoured over lightly regulated fintechs, because they already have compliance, risk and capital frameworks aligned with RBI expectations. For merchants and aggregators, BNPL integration choices will be guided as much by regulatory robustness and dispute handling as by conversion uplift, shifting negotiations away from purely commercial terms.

Linking BNPL with UPI and cards blurs boundaries between payment instruments

• BNPL is increasingly delivered through existing card and UPI rails rather than as standalone apps. RuPay credit cards can now be linked to UPI, allowing customers to make QR code payments from their credit lines via apps such as Paytm, PhonePe, and others.
• NPCI’s “Credit Line on UPI” framework lets banks expose revolving or fixed credit lines through UPI handles, enabling EMI-like or pay-in-full experiences at merchants that previously only accepted bank-account-based UPI. Banks and fintechs are also launching EMI-centric credit cards that make “pay-over-time” the default behaviour (e.g., EMI-driven cards launched with fintech partners such as BharatPe and Unity Bank in 2025).
• UPI’s ubiquity of over 16.5 billion transactions in a single month in late 2024 makes it the natural front-end for any consumer payment proposition. Credit products bolted onto UPI gain instant merchant acceptance and consumer familiarity.
• Regulators and banks prefer credit to flow through established products (cards, formal credit lines) that can be fully reported to bureaus and subject to existing prudential rules, rather than through opaque pay-later wallets. For providers, using UPI and card schemes lowers acceptance-side friction: they can plug into existing QR and POS infrastructure rather than negotiate separate BNPL integrations for every merchant.
• The distinction between “BNPL” and “card EMI” will narrow; consumers will experience BNPL as just another way to use their card or bank credit line at UPI-enabled merchants. Standalone BNPL apps that do not control a card or UPI-linked credit product will find it harder to secure top-of-wallet status at checkout; many may pivot to becoming origination or collection partners to banks. Metrics such as “credit on UPI” usage and UPI-linked card EMIs will become more important indicators of BNPL-type activity than pure “BNPL app volumes”.

Using small-ticket BNPL to extend credit access forces sharper risk management

• Small-ticket digital credit, including BNPL-type products, has scaled rapidly, particularly among younger and new-to-credit customers. Industry association data show digital lenders disbursed about ₹97,000 crore in H1 FY2025, with roughly four-fifths of loans below ₹25,000 and many of them short-term.
• In parallel, the stock of credit cards has more than doubled in five years to around 10.8 crore by end-2024, and RBI data show credit-card NPAs rising by over 28% in 2024, signalling stress in parts of the unsecured portfolio. BNPL sits in this broader unsecured credit bucket: it attracts similar cohorts (young, urban, ecommerce-active) and is increasingly visible to lenders through bureau reporting and new RBI rules on higher-frequency data submission.
• Persistent income pressure and higher interest rates have kept demand for short-term, low-ticket credit elevated, especially for online shopping, bill payments and everyday expenses. Fintech interfaces make it simple to take multiple small loans, but regulators are now tightening the loop: weekly or more frequent bureau reporting, structured KFS, and clear lender-of-record roles increase visibility of BNPL obligations in credit assessment. Banks, facing rising card delinquencies, are becoming more conservative when underwriting mortgages and large loans, often treating BNPL and other small-ticket exposures as part of total indebtedness.
• BNPL will remain a relevant entry-level credit option, but acceptance criteria will tighten: more users will face income checks, bureau pulls, and lower limits, especially if they already have multiple short-term loans. Providers will invest more in underwriting and collections, using real-time transaction data, employer information and repayment histories to segment risk, rather than relying primarily on growth. For consumers, BNPL behaviour will increasingly influence access to other credit: missed instalments or stacking multiple BNPL lines are more likely to affect home-loan or auto-loan approvals, which in turn should temper uncontrolled usage.

Rationalising BNPL portfolios shifts competition toward embedded, bank-backed models

• The Indian BNPL market has already seen a correction: high-profile startups such as ZestMoney announced shutdown plans in 2023-24 after facing funding and regulatory headwinds, while other products (e.g., certain wallet-linked BNPL cards) have been discontinued or scaled back.
• At the same time, large ecommerce, wallet, and PSP players continue to offer pay-later options in partnership with banks and NBFCs (e.g., Amazon Pay Later via Capital Float, Paytm Postpaid-type offerings, card-EMI flows through PSPs), but with tighter compliance and underwriting aligned with the new digital lending regime. Newer entrants in 2024-25 are less likely to position themselves as pure BNPL providers and more as embedded-credit platforms or lending-as-a-service partners for merchants and payment gateways.
• Funding conditions for loss-making consumer-lending models have tightened, pushing fintechs to prioritise unit economics and stable bank/NBFC partnerships over standalone growth. Regulatory constraints on wallet-based models and the emphasis on regulated entities as lenders of record naturally favour bank- or NBFC-backed BNPL, whether at checkout or via UPI/card rails. Large merchants and PSPs prefer dealing with fewer, well-regulated lending partners that can scale across categories, thereby reducing the room for many small, niche BNPL startups.
• The number of distinct BNPL brands may not grow significantly; instead, volumes will concentrate with a mix of large banks/NBFCs and a limited set of fintech front-ends plugged into payment platforms. BNPL will become more embedded and less visible as a standalone category: consumers will see offers labelled as “EMI”, “Pay in 3” or “Pay next month” within familiar apps (ecommerce, wallets, UPI), powered by a smaller set of regulated lenders in the background. Competitive differentiation will shift from simple pay-later availability to approval rates, dispute handling, integration with loyalty programmes, and the ability to underwrite responsibly within the RBI framework.

Competitive Landscape

Current State of the Market

• BNPL in India operates within a regulated digital lending framework, with competition concentrated among banks, NBFC partners, and large ecosystem platforms. RBI’s updated digital-lending requirements and restrictions on loading credit lines into wallets have narrowed the presence of standalone BNPL fintech models, shifting the market toward bank-linked pay-later products, card-based EMIs, and UPI-linked credit lines.
• Providers compete primarily through merchant integration depth, approval rates and underwriting quality rather than promotional pricing. UPI’s growing role, supported by “credit line on UPI” and the expansion of RuPay credit cards on UPI, has intensified competition among banks to link their credit products to UPI front ends.

Key Players and New Entrants

• Amazon Pay (with Capital Float), Paytm-branded postpaid models (via bank/NBFC partners), and Flipkart’s credit ecosystem remain influential in ecommerce-driven BNPL. Banks such as ICICI Bank, HDFC Bank, Axis Bank and SBI dominate card-EMI and UPI-linked credit propositions, while fintechs like LazyPay, Simpl and Kissht continue to operate, though at reduced scale or with revised constructs.
• New entrants in 2024-25 are mostly bank-anchored offerings embedded within UPI apps or ecommerce apps rather than standalone BNPL startups, reflecting regulatory expectations. Pure-play BNPL launches have been limited following ZestMoney's exit announcements and the discontinuation of wallet-linked pay-later variants.

Recent Launches, Mergers, and Acquisitions

• Key activities include banks expanding UPI-based credit lines, partnerships between merchants and regulated lenders, for instant, EMIs, and fintech-bank tie-ups to realign disbursement flows with RBI rules. ICICI Bank’s discontinuation of its PayLater credit line on UPI illustrates a broader industry shift toward portfolio rationalisation. No major BNPL-specific M&A occurred in the past year, though several fintechs have scaled down or restructured operations after regulatory tightening.

Report Scope

India Retail Industry & Ecommerce Market Size and Forecast

• Retail Industry - Spend Value Trend Analysis
• Buy Now Pay Later Share of Retail Industry
• Ecommerce - Spend Value Trend Analysis
• Buy Now Pay Later Share of Ecommerce

India Buy Now Pay Later Market Size and Industry Attractiveness

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis
• Market Share Analysis by Key Players

India Buy Now Pay Later Revenue Analysis

• Buy Now Pay Later Revenues
• Buy Now Pay Later Share by Revenue Segments
• Buy Now Pay Later Revenue by Merchant Commission
• Buy Now Pay Later Revenue by Missed Payment Fee Revenue
• Buy Now Pay Later Revenue by Pay Now & Other Income

India Buy Now Pay Later Operational KPIs

• Buy Now Pay Later Active Consumer Base
• Buy Now Pay Later Bad Debt

India Buy Now Pay Later Spend Analysis by Business Model

• Two-Party Business Model
• Third-Party Business Model

India Buy Now Pay Later Spend Analysis by Purpose

• Convenience
• Credit

India Buy Now Pay Later Spend Analysis by Merchant Ecosystem

• Open Loop System
• Closed Loop System

India Buy Now Pay Later Spend Analysis by Distribution Model

• Standalone
• Banks & Payment Service Providers
• Marketplaces

India Buy Now Pay Later Spend Analysis by Channel

• Online Channel
• POS Channel

India Buy Now Pay Later By End-Use Sector: Market Size and Forecast

• Retail Shopping
• Home Improvement
• Travel
• Media and Entertainment
• Services
• Automotive
• Health Care and Wellness
• Others

India Buy Now Pay Later By Retail Product Category: Market Size and Forecast

• Apparel, Footwear & Accessories
• Consumer Electronics
• Toys, Kids, and Babies
• Jewelry
• Sporting Goods
• Entertainment & Gaming
• Other

India Buy Now Pay Later Analysis by Consumer Attitude and Behaviour

• Spend Share by Age Group
• Spend Share by Default Rate by Age Group
• Spend Share by Income
• Gross Merchandise Value Share by Gender
• Adoption Rationale
• Spend by Monthly Expense Segments
• Average Number of Transactions per User Annually
• BNPL Users as a Percentage of Total Adult Population

Reasons to Buy

• Strategic and Innovation Insights: Gain clarity on the future direction of India's Buy Now Pay Later market by analysing strategic initiatives, business model evolution, and innovation-led approaches adopted by key BNPL providers to strengthen market positioning.
• Comprehensive Understanding of BNPL Market Dynamics in India: Assess market size, growth outlook, and structural shifts across retail and e-commerce, supported by detailed segmentation by channel, business model, distribution model, merchant ecosystem, end-use sector, and consumer demographics, underpinned by 90+ KPIs.
• Value and Volume-Based KPIs for Market Accuracy: Leverage a robust set of value and volume KPIs, including GMV, average transaction value, transaction volume, active users, revenue, and bad debt, to develop a precise understanding of BNPL adoption, usage intensity, and market maturity.
• Competitive Landscape Assessment: Obtain a clear snapshot of the BNPL competitive landscape in India, including market share analysis of leading providers, enabling informed benchmarking and evaluation of market concentration and competitive intensity.
• Actionable Inputs for Market Entry and Expansion Strategies: Identify high-growth categories, priority end-use sectors, and distribution channels to fine-tune go-to-market and partnership strategies, while assessing key trends, regulatory considerations, and risk factors shaping the BNPL ecosystem.
• In-Depth Consumer Behaviour Analysis: Enhance ROI by understanding evolving consumer attitudes and spending behaviour, with insights into BNPL adoption drivers, usage frequency, income and age-based usage patterns, gender splits, and monthly expense segmentation.