A note of caution amid the BNPL boom

India’s ‘buy now, pay later’ market is on fire, with almost every large fintech startup dipping into it. But despite the massive opportunity it holds, can the Afterpay and Affirm model be replicated in a market where retailers are yet to attain the level of maturity of their western counterparts?

author-image

By 

Pratik Bhakta

October 18, 2021

8 Min Read

As the ‘buy now, pay later’ business—a limited-period, zero-interest consumer credit scheme—heats up across the world, the impact is being felt in India as well. While several early-stage entrepreneurs have hopped on the country’s nascent BNPL market, established lending startups too are pivoting to this to attract investor attention and better valuations.

Capital Float recently raised $50 million from Lightrock India, Sequoia Capital and others, pitching its BNPL business with Amazon, MakeMyTrip and Unacademy. A few days prior to this, BNPL startup ZestMoney raised $50 million in a strategic investment from Australian BNPL company Zip.

Also, payments Unicorn BharatPe launched a BNPL offering called PostPe last month for consumers transacting on BharatPe QR codes. And Paytm offers users of its digital wallet a postpaid product for BNPL purchases. Several consumer-facing platforms have their own pay-later options, like Ola Money Postpaid.

While the BNPL opportunity is huge, multiple factors influence the market in India. Well-capitalized consumer-focussed banks can give startups a run for their money, and given the relatively small size of India’s ecommerce market, retail players like Bajaj Finance rule the roost.

And as Covid-19 took the wind away from India’s consumption story, the gross non-performing rates, or non-repayment of loans, of several BNPL companies have increased to 10-15% in the last year-and-a-half, from around 5% earlier, say industry sources.

Why

Subscribe

Pricing

As a premium subscriber, you will get access to 3+ premium articles a week
Limited time offer
Launch price
INR
2,399
/ Year
INR 3,999
Save 40% with our launch offer.
Please apply the code at checkout.

copyCopy Code

Upgrade Now

Why

Subscribe

As a premium subscriber, you will get access to 3+ premium articles a week

Smart Information, Better Decisions

We report on the latest and most important developments in India’s biggest tech companies and also disruptive startups so you can make better decisions.

Seasoned Team

Tracking the highs and lows of India’s biggest internet companies over the past decade has given us access to the right decision-makers to interpret the latest state of play.

Inside View with Org Charts

Know the key decision-makers with Org Charts. We thrive on decoding boardroom conversations so we can bring you a 360° view of what's happening at India's high-growth companies.

Filtering the Noise

New economy companies cannot always be evaluated using traditional methods. We analyze the relevant metrics, ask the tough questions to get you the right picture
share-button
like-button
share-button

For subscribers only

Premium Reads

>>

View More >>

Deeply reported and objective news on the country´s fastest-growing companies and the people behind them.