Buy Now, Pay Later (BNPL) services have seamlessly integrated into everyday transactions for many individuals without feeling like traditional borrowing. These payment options, often interest-free and quick, are gaining popularity among young Indians. However, experts caution that the ease of BNPL may lead to accumulating debt without immediate notice, impacting monthly budgets.
The BNPL market in India is estimated to be between $15 billion to $30 billion in 2024, with continuous growth anticipated in the coming years. Despite the market’s expansion, the hidden burden of repayment often catches users off guard, as debts are deducted from salaries, affecting financial stability at month-end.
Vibhore Goyal, the founder of OneBanc, highlights that BNPL is reshaping how the younger generation engages with financial systems, emphasizing the shift towards credit as the entry point and salaries as the repayment channel. This trend, while promoting financial inclusion, raises concerns about the lack of income verification in decision-making processes.
Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings, acknowledges the appeal of BNPL as a short-term credit solution that enhances consumer purchasing power. However, he warns about the hidden risks associated with multiple small credits from various BNPL providers that can strain users’ financial resources when due dates converge.
To ensure the sustainability of BNPL services, stakeholders must collaborate to establish transparent pricing, disciplined underwriting practices, and regulatory oversight. The goal is to transform BNPL into a viable long-term financial product rather than a short-lived growth catalyst.
Ranjan Agarwal, Founder and CEO of Collectedge, underscores the importance of recognizing the invisible debt layer created by BNPL that users often overlook. He cautions against the potential credit score damage resulting from missed payments and emphasizes the need for accountability and responsible lending practices in the BNPL ecosystem.
In conclusion, while BNPL presents new credit opportunities and convenience for users, responsible usage, awareness, and transparency are essential to prevent the quiet accumulation of debt and maintain financial well-being.