How many times were you tempted to order your food online but paused thinking about the bank balance at the month end, or were too cash-trapped to book a cab? You probably don’t know about the many apps that allowed you to make deferred payments. Buy Now Pay Later (BNPL) apps have become a Rock of Gibraltar for many in recent times, offering the option of purchase of a range of products and services from various merchants even if one’s bank balance is running low.
Offering the options for a flexible repayment period and multiple EMIs as per your need without any credit card, Buy Now Pay Later apps were already booming, but the pandemic has further accelerated the need and demand among the young earners going through layoffs and pay cuts. Various online shopping sites have partnered with these BNPL apps to provide easy and hassle-free repayment options to customers, and lure them to go on shopping without worrying much about the budget.
Simpl is one such digital payment platform, which provides consumers the option to buy now and checkout in one click with pay later functionality for e-commerce purchases. Nityanand Sharma, co-founder & CEO of Simpl, has managed to make a network of 1000+ merchants, including Zomato, Dunzo, BigBasket, MakeMyTrip, Grofers, Quick Ride, Furlenco, etc. In his current capacity, Sharma is responsible for establishing the long-term vision for the company, its business development, and product strategy. We spoke with him about this emerging preferred payment mode among millennials.
‘Buy Now, Pay Later’ options are thriving. Why do you think there’s a shift in payment preferences by millennials?
There are several factors driving this shift. The primary driver is that modes like BNPL allow millennial users to uncomplicate their lives. And the product aligns with a millennial consumer’s value system, which is that of great experiences, control, and transparency. Using BNPL, consumers can make payments in the form of a monthly bill. They do not have to worry about paying for each purchase, remembering CVVs, and scrambling for cash. In addition, payment modes such as BNPL are also safe and secure, thereby allowing the purchases to be completed without any issues.
Has the pandemic & subsequent lockdown further accelerated the already emerging trend?
Definitely. Although payments using these modes were already on the rise before 2020, the COVID-19 crisis has ensured that millennials are making the transition at a much faster rate. It is also likely that this trend will continue in the foreseeable future.
Stores/e-commerce sites have seen a boost in credit payments, especially in the festive season. Isn’t it risky for retailers?
While it is true that credit payments are becoming increasingly popular, this doesn’t necessarily transition into heightened risks. This is due to the fact that modern-day credit decisions are driven by technologies such as artificial intelligence and machine learning. The extensive use of these technologies means that even though credit is being provided to the customer, it is relatively secure.
While e-commerce sites may get more traffic, how do BNPL apps and sites benefit?
BNPL apps and sites do not necessarily rely on website traffic. For instance, at Simpl we believe that ‘the best payment experience is no experience at all’. We are focused on making the payment experience of the consumer seamless, secure, and fast, on the merchant app. Our primary focus is on the data, which is analysed in order to tailor solutions according to the needs of the consumer. In addition, BNPL providers boost conversion for retailers and help them to grow their businesses. The focus is to create great user experiences and build trust between merchants and their consumers not on driving traffic to the BNPL site.
With so many FinTechs and also e-commerce BNPL portals, what are the market opportunities and challenges?
India is a huge market for FinTech providers. This is because the penetration levels of their services continue to be low despite the recent advancements. The potential opportunities are huge, especially in the Tier II and Tier III cities. This is where the FinTech firms can really make a mark. In addition to the above, there are also certain challenges in the Indian market. One of the biggest challenges is the lack of awareness about this niche offering but people are becoming more accepting of newer ways of payment over cash. Nevertheless, Indian FinTech firms are trying their best to overcome these and realise their true potential.
All images: Courtesy Getty