Pay Later cards are converting your monthly spends in 3 EMIs over 3 months. How does this new BNPL facility work?

There is no dearth of payment options in the market. From credit cards to UPI there are plenty of them. The one facility, however, that has recently gained popularity is Buy Now Pay Later (BNPL). Consider this: Consulting firm RedSeer estimates that BNPL market in India will zoom to $45-50 billion by 2026 from the current market size of $3-3.5 billion. The number of BNPL customers is also expected to rise to 80-100 million from the current number of 10-15 million customers.

Primarily, there are two types of digital players in the market -- payment finance and transaction finance. For example, in case of BNPL players like LazyPay and Simpl you don’t have to go through the lengthy process of adding credit cards or money into wallet or wait for an OTP. You can just accumulate all your bills and pay only one bill after 15 days. Then there are players that allow users to shop online as well as offline and pay later through EMIs.

“There are multiple types of BNPL products in the market. There is one BNPL product done by the likes of LazyPay, Simpl and OlaMoney Postpaid, where you are making a payment for faster check out and it is due after 15 days. The traditional finance which started with Bajaj Finance in 2007, provides zero cost EMI when you walk into a physical store. The third type of BNPL are companies like Uni where our value proposition to customers is flexibility,” said Nitin Gupta, Co-founder and CEO, Uni.

Powered by Visa, Uni Pay offers both a physical and a digital card. The physical card works across retailers who accept Visa cards which gives it a wide acceptance.  It automatically splits transactions into one-third with no interest, making it suitable for those who want short-term liquidity without being burdened with high interest fees. If you want to convert your bills into longer tenure EMI then the interest charges of 14-18 per cent will be applied by the company. The minimum due amount has to be paid in every billing cycle, or else one has to pay late fees which are decided based on the slab.  

The card also offers consumers the flexibility to convert transactions to ‘Pay in Full’ at the end of the 30 day free credit period and in return can enjoy a 1 per cent reward in the form of cashback.  

“Credit card is a very expensive product. They have revolving interest. Then they charge interest on interest and in case of late payment interest is charged from the date of transaction. In case of BNPL there is only late fee. There is no interest fee on new purchases in case of partial payment. BNPL is a very user friendly product,” said Gupta.

Uni offers credit only to super prime customers with the bureau score of 760 and above. The card provides a credit limit in the range of Rs 20,000 to Rs 6 lakh depending on customer’s risk profile.

Similarly there is another Visa powered pay later card by Slice. It is a fintech startup focused on youngsters that allows shopping anywhere and splitting all bills over 3 months without any extra charges. It gives a credit limit of Rs 2000 to Rs 10 lakh. Considering it targets millennial one does not require a credit score to get the card.  

This new-age BNPL are offering cards that get approved within seconds and get quickly delivered with a handsome credit limit. The USP of these cards is that they are Visa powered and can be used anywhere. “We saw more than 100 per cent increase in transaction value in October alone. Uni, which launched its pay-later card - Pay 1/3rd in June 2021, is seeing 3x growth in spends during this festive season on e-commerce platforms. Since August, it has been steadily growing its transactions and is currently doing more than Rs 100 crore in monthly disbursals.  e-commerce is one of the biggest categories for Uni across age groups (21-60 years), both in metros and Tier 2 cities,” said Gupta.

Also Read: Byju's to raise $1.2 bn through term loan funding; plans North America expansion: Sources

Also Read: SBI sold over 15 loan accounts at a 65-67% discount under former chairman Pratip Chaudhuri