India’s buy-now-pay-later (BNPL) industry is booming and set to surge over ten-fold within four years as tens of millions of online shoppers get lured by interest-free credit with fewer hassles, note market players 

Management consultancy company RedSeer estimates that the country’s BNPL market will rocket to $45-50 billion by 2026 from the current $3-3.5 billion. The consultancy company also estimates that the number of BNPL users in the country may rise to 80-100 million (8 to 10 crore) customers by then from 10-15 million (1 to 1.5 crore) currently. 

However, since the maximum credit currently being offered on BNPL is Rs 1,00,000 ($1,347.89), much lower than credit card offers, it will take some time before it can disrupt the cards market or wrest market share, opines analysts at Macquarie Research. 

Fintech firm MobiKwik sees BNPL business nearly doubling for the company in two years in a country where hundreds of millions of people have little access to formal credit. 

MobiKwik, which is among the top BNPL players in India and is backed by the Abu Dhabi Investment Authority, adds that income from the segment accounted for nearly a fifth of its Rs 302 crore revenue for the financial year ended March 31. 

“Only 60-70 million (6-7 crore) Indians have access to credit today, which means 93 per cent of India has no access to credit,” points out Upasana Taku, a co-founder of MobiKwik. 

“It will become the fastest revenue driver for the business because there has been 45 times growth in the BNPL transactions in the last two years. New user addition is very high; repeat rate and average ticket size is (sic) going up.” 

As the COVID-19 pandemic sent more and more people towards online shopping, the demand for easy loans has driven more players to enter the BNPL market – Amazon joined the BNPL bandwagon in 2020, while homegrown payments firm BharatPe started the service last month. 

“A very large population of millennials and young customers during the pandemic were looking for credit and to extend their budgets, because of different uncertainties in these times,” notes Vikas Bansal, the director of Amazon Pay India, explaining the new-found interest in BNPL. 

To be sure, there are concerns that risk of defaults from the BNPL customers with limited or no credit history could be higher, even as some industry experts add that certain players may not be reporting accurate default details to credit bureaus.