Fintechs have disrupted the way
traditional banks have functioned to this day and paved a path for
themselves. They have leveraged the estimation that only 8% of the
world’s currencies exist in physical form and the rest is cached as
mere digits inside computer memory. Fintechs have evolved surrounding
this fact by offering integration between financial and technological
resources to develop financial solutions for organizations.
Furthermore, Fintechs have been enabled newer technologies by
integrating Touch ID, Face Recognition, Biometric, etc. to services
offered by financial circles. Considering the current pace, as per
estimations, the global Fintech market will touch $330 billion by 2022.
Before Covid-19, Fintechs were emerging
as challengers to traditional banks but, by the end of 2020, Fintechs
have progressed drastically and stand as strong contenders today.
Today, Fintechs have fabricated and
launched a variety of appealing services. With the help of technology,
customers are given offers and payment options like never before. A
widely used Fintech service- Buy Now, Pay Later (BNPL), a credit
system, that has changed the landscape of credits and is swaying the market.
What is Buy Now, Pay Later?
BNPL is an online payment credit system
that allows a customer to purchase today, online or in-store and pay
at a future date, often interest-free. It is a type of credit that is
transparent, seamless, quick and without any prerequisites.
How has it changed the market?
The new dynamics in payments has
highlighted multiple limitations in the traditional payment landscape.
The FinTech drive is slowly covering this inherent payment limitation.
Today, a person can avail credit ranging between Rs 10 to Rs 1,00,000
with a repayment span of 30 days to 36 months. The Indian market is
under-penetrated by credit cards since only 30 million people use
them. Hence, Fintechs took note of this loop-hole and devised a
strategy to overcome it by introducing a credit system, BNPL, without prerequisites.
As of today, BNPL is the fastest growing
online payment method with an estimation to reach 8% in 2024 from 3%
in 2020. A survey has predicted that BNPL would grow by 65.5% in
India, reaching a value of $ 11.57 billion in 2021. Furthermore, the
adoption of BNPL is to rise by a whopping 24.2% CAGR from 2021 to 2028.
Realizing the potential of BNPL, several
merchants like Amazon Pay, PayTM Postpaid, Flipkart Pay, etc. offer
services not only on their platform but also through their channel
partners. The amount and duration depend upon the transaction size and
vendors but this ensures an increase in their audience size. For eg:
Amazon Pay has a credit limit for customers of Rs 10,000 with a
duration of 20 days whereas PayTM Postpaid offers a 30-day duration
and amounts up to Rs. 1,00,000.
Fintechs have anchored a base with BNPL
since they do not have to comply with all the lending obligations that
apply to banks and other lenders. Moreover, with a boost in online
transactions in Tier 2 and Tier 3 cities due to improved internet
connections and shopping facilities, BNPL has also managed to widen
Today, BNPL is the most sought-after service by Fintechs and as time
progresses, it has the potential to uptick major payment options.