Buy Now Pay Later Market in India 2023

Buy now pay later (BNPL) services are gradually gaining traction in the Indian payments market. In terms of revenue based on gross merchandise value (GMV), the BNPL market in India was valued at INR 950.31 Bn in FY 2022. The payment method has resonated with consumers across age groups and classes and has become the default payment choice for many in the country.

The major BNPL brands in India include Amazon Pay Later, Freecharge, ZestMoney and Flipkart Pay Later. Launched in April 2020, Amazon Pay Later already has over 4 million registered users, driven by a faster customer sign-up process, and its wider use cases for goods purchases and utility payments. The existing large customer base of Amazon has also contributed to its success.

Market influencers:

Increased affordability followed by the surge of e-commerce has led key BNPL market players to provide exposure to new customers. Certain market players have invested in co-branded marketing activities (collaborating two brands) to boost offers at BNPL’s checkout. One such example is the collaboration of Amazon Pay Later and Make My Trip for flight bookings. Moreover, favorable reimbursement policies improve accessibility which also aids in the market's growth.

Despite some major drivers aiding the growth of BNPL in India, the market also faces some challenges. Increasing purchasing trends among young consumers followed by risk of missed payments leading to extra charges are some bottlenecks faced by BNPL market in India.

Impact of COVID-19:

The demand for quick loans has prompted additional businesses to enter the BNPL industry as the Covid-19 pandemic drove an increasing number of consumers to shop online. Currently, BNPL offers are primarily limited to financing online purchases in categories like apparel, cosmetics, gadgets, food, etc., which are frequently impulse based. However, fintech start-ups have recently developed a unique offline BNPL product for financing need-based healthcare expenses at physical points of care, known as"Care Now Pay Later" (CNPL).

Indian government has aided start-ups to build innovative products and services, and this is where Care Now, Pay Later has the capability to revolutionize how healthcare providers deliver and end users consume healthcare.

Competitive insights:

With high demand, the key private players are aiming at increasing their offers and improve the quality of service, to dominate market position. Major players such as Amazon Pay later, Freecharge Pay later, Mobikwik ZIP have made huge strides in their net revenue. This is because of government initiatives that propelled increased BNPL usage in the country.