Praveen Paulose, MD & CEO, Celusion Technologies

Born in 1978 in Mumbai, Praveen completed his schooling at St. Mary’s High School, Mt. Abu(Boarding School in Rajasthan). He completed his Bachelor of Engineering in Computer Science from D.Y. Patil College of Engineering, Mumbai. After a brief period of employment, he became a first-generation entrepreneur when he started Celusion Technologies. The idea was based on the premise that they could build great software but today their software is changing the way people look at finance.


The latest short term financing option that has been made available to consumers is the Buy Now Pay Later (BNPL). This option has been available for the last few years and is picking up as a great alternative to credit cards. The e-commerce segment in India is poised to hit $ 99 billion by 2024 as confirmed by a study conducted by Goldman Sachs. BNPL is expected to triple its share as a payment option from 3% in 2020 to 9% in 2024.

So what is special about BNPL?

Simple financing scheme at checkout 

The Buy Now Pay Later scheme is a simple financing scheme available to buyers at checkout where they can opt to pay in equal installments over 3-36 months. The scheme is available in most online marketplaces. Several offline retailers are also offering the same in partnership with fintech lenders. Several leading lending apps like KreditBee and LoanTap are offering BNPL schemes.

Zero to nominal interest rates

This financing is available at zero to nominal interest rates with no hidden charges which makes it quite popular among millennials. This helps customers to make their purchases with confidence and reduces the instance of abandoned shopping carts. The convenience of buying what you need right now to avail of promotional offers or to meet an urgent need without worrying about paying upfront is unparalleled. 

Online sign up with minimum documentation

Unlike credit cards, BNPL doesn’t involve elaborate paperwork. It is a digital sign up that is completed in minutes. If you are an Indian citizen or resident over 21 years old with a valid bank account and a regular monthly income, you are eligible. All you need to do is fill out certain details including your PAN Card, Aadhaar Card and Bank account. A soft credit score check will help to authenticate your details. A monthly credit limit will be offered to you which you can use to make your purchases.

Convenient repayment over a fixed tenure

If the interest rates are zero to nominal, it will make sense to opt for a BNPL scheme while shopping for anything, be it essentials or bigger items. It gives you more liquidity and helps you manage your cash flow better.

Cheaper than credit cards

Credit cards are excellent as long as you pay the entire amount on the due date. The interest rates on late payments are exorbitant, ranging from 2.5- 3% on a monthly basis. There are several additional charges as well which may not be clear to the user at first sight. On the other hand, BNPL offers credit at zero to nominal interest rates. While one may argue that credit cards provide higher limits, BNPL has a wider reach as it covers the majority of the population who cannot get a  credit card.

Improvement in customer footfalls

The convenience of shopping with the BNPL scheme has helped bring customers back to online and offline stores in droves. After the Covid-19 pandemic, online shopping has picked up in general and BNPL adds an additional incentive. 

Availability of promotional offers

Merchants are able to push through promotional offers faster with this scheme leading to an overall pickup in sales. With the BNPL scheme, customers tend to complete their purchases instead of putting off discretionary purchases for tomorrow. Since there is no /minimal interest cost involved, customers prefer to use the BNPL mode where they can make payments over the next few months.

No hidden charges

There are no hidden charges in a  BNPL scheme which makes it transparent and easily accessible. This has made the scheme popular with millennials as they find it easy to meet their aspirations using the BNPL scheme. It puts less pressure on their cash flows while they are able to purchase what they need.

What should be borne in mind regarding BNPL?

While BNPL is a convenient alternative to credit cards, the credit limit provided by BNPL would be much lower than a credit card. It should also be noted that BNPL is a kind of personal loan and will need to be repaid on time without delay or default. Late fees and penalties would be applicable in such cases. Any non-payment will be reported to the credit bureau and can have a negative impact on the credit score.

When compared with a credit card, BNPL works out much cheaper from an interest point of view. There are no hidden charges either. However, BNPL is limited to a few sites or specific retailers whereas Credit cards can be used anywhere. The eligibility criteria to qualify for BNPL is minimal compared to a credit card which allows for more credit inclusion. While the credit card is based on the monthly salary, BNPL is based on the monthly bank balance. 

The BNPL scheme is helping credit inclusion penetrate to the underserved segments of the population. Due to the proliferation of smartphones and access to cheap internet, a large segment of the population has switched to online shopping. This has led to an increase in the usage of BNPL as a checkout option. Several fintech lenders are offering the BNPL scheme in India.

The easy signup, one-click checkout and the ease and transparency of the process have attracted the tech-savvy younger generation who find it the best option to complete their purchases. Of course, one needs to be aware that all purchases need to be paid for over a period of time and one should not go overboard with impulsive purchases.

In a country like India with wide disparities in income, BNPL can be a potential game-changer as it will provide access to credit to a vast majority of the population. This could trigger off the consumption cycle and help fuel growth. The need of the hour is to spread awareness about this product. It is early days yet in India for BNPL but it is poised to take off explosively in the near future.

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