BNPL firms face lending’s hard reality; Truecaller dials up expansion push

BNPL firms face lending’s hard reality; Truecaller dials up expansion push

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Pratik Bhakta

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Madhav Chanchani

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Pratik Bhakta

122 reads
author-image

Madhav Chanchani

105 reads

The Crux newsletter this week. Lending is easy, collections are hard. ‘Buy now, pay later’ startups are learning the significance of this old industry saying as their customers miss repayments. Sweden’s Truecaller makes most of its money in India, but it is now eyeing markets like the US. Why?

March 04, 2022

5 Min Read

The buy now, pay later (BNPL) offering was designed to help people shop without second thoughts and digital lending startups avoid high customer acquisition costs. But not everything has gone as planned, and for this nascent segment currently, it looks a bit like buy now, pain later.

Startups are grappling with the problem of late or missed repayments. Some large platforms are seeing bounce rates, i.e. loans not paid back on time, of 10 to 12%, said a senior executive in the space. 

They are forced to use recovery teams to make consumers pay back loans due for more than 30 days, a standard practice in the lending industry. Recovery rates of such loans hover above 80%, he added.

Loans not paid for over 90 days are classified as non-performing assets, or NPAs. In the BNPL segment, the recovery in such cases is 20 to 25%, according to the executive.

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