Expected to touch $40 billion by 2025
Mumbai, NFAPost: The Buy Now Pay Later (BNPL) category of the fintech sector is growing by 65 per cent YoY, recording 9X funding growth in 2021 and huge mass adoption, according to Redseer Consulting’s report. The fintech subsegment is expected to touch around $40 billion by 2025.
“The compelling value proposition, coupled with the ability to avail of attractive discounts and cashback offers, has led to rapid adoption,” the report noted.
The report added, BNPL provides users greater flexibility, allows them to make purchases across a wide variety of categories and stores. This also reduces the financial burden on users, as they are no longer required to make repayments across a pre-specified repayment period.
Last year, there were several BNPL products launched across fintechs and even traditional banks such as ICICI Bank. Nearly 73 per cent of the users of BNPL availed of the offering for online shopping. Within this, the major use cases include food delivery, bill payments, online travel, eHealth, EdTech, and ride hailing.
The fintech start-ups are now actively working on diversifying their use cases with wider merchant partnerships, providing larger market opportunity.
Mrigank Gutgutia, Associate Partner, Redseer, said, “The majority of consumers use their BNPL offering frequently, have good usage hygiene, and usually pay on time. However, there are some consumer experience areas to be solved to drive higher ARPU/ LTV from the existing user base.
Increased credit limit, cash withdrawals, improved user convenience, and more merchant tie-ups are a few key areas that need improvement. Regulations will also be key — several nations have started regulating BNPL to protect users and reduce defaults, while India is still in the nascent stage”.
