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India’s online payment industry has witnessed some significant changes in recent years. Numerous fintech firms have launched new modes of payment that simplify the consumer payment experience. Mobile wallets and unified payments interface (UPI), along with the tried and tested debit and credit cards, are some of the most popular options. But a newer form of digital payment known as Buy Now Pay Later (BNPL) has seen growing popularity.
Let’s take a closer look at what makesBNPL the preferred digital payment option today.
What is BNPL?
BNPL is actually an age-old model that has been practised in countries like India for years. Local kirana stores would follow the Khaata system, where the shopkeepers endowed a special status based on trust to certain loyal customers; they were allowed to open tabs and pay a final bill at the end of the month. The newer version of BNPL is simply a revised app-based version of the Khaata.
How is BNPL different from other Digital Payment Services?
The use of BNPL services has skyrocketed in the past few years, especially during the pandemic. In fact, according to estimates, the daily essentials transactions conducted via Simpl increased by over 50% during the COVID-19 period. But what is it that drives customers to opt for BNPL over other digital payment modes? Let’s dive through the key benefits.
Availing credit or micro-credit has always been a difficult task as it comes with stringent eligibility criteria. Consumers need not worry about the same with BNPL. They receive a unique spending limit that enables them to shop without having to pay immediately. Another feature that makes BNPL so attractive is that there is zero to near-zero interest on the repayment..
Convenience is one of the hero aspects of the BNPL model. Gone are the days of multiple payment gateways, OTP and card details. BNPL enables customers to complete their purchase with just one tap. The bills from different platforms are then consolidated into a single bill. This makes it much simpler for consumers to keep track of all their expenses as they can pay it off in one shot.The process can also be automated, making life easier for consumers.
Further, BNPL also provides a major benefit in terms of being universal
This mode of payment is not only beneficial for consumers, but it is also equally rewarding for retailers or sellers. For example, if a retailer signs up for a BNPL solution, they can ensure a regular flow of cash at the end of each month or the respective billing cycle. Not to mention, merchants witness lesser drop-off rates at checkout pages with BNPL and higher purchase frequency and ticket sizes even. BNPL thus goes a long way in resolving the cash woes – both for retailers and consumers.
More Secure Payment Mode
BNPL offers customers increased security against fraud as they are not required to share any sensitive information like card or bank details. All you have to do is register your mobile number and you can start shopping. The entire payment experience is seamless since there is no need for multiple levels of verification and authentication.
The Future of BNPL
Customers and merchants are always looking for a frictionless payment experience and BNPL offers them just that. It is streamlined with one tap, a nearly invisible payment experience. To add to this, the efficiency of real-time payments without the risk of transaction failure is what entices consumers and merchants to get on board.
As BNPL relies on ever-evolving AI and Machine Learning systems, the efficiency in fraud detection and prevention increases by the day. All these features are why BNPL is at the forefront of the future of digital payments.