Buy Now Pay Later (BNPL)

How BNPL Works

When using a BNPL service, you typically pay a portion of the purchase price upfront, with the remainder spread across equal installments. These payments are often interest-free if completed within the agreed timeframe.

Example

Suppose you buy a gadget worth ₹10,000 through a BNPL provider. You might pay ₹2,500 at checkout, with the remaining ₹7,500 divided into three installments of ₹2,500 each, paid over the next three months. If all payments are made on time, you pay no extra charges.

Key Components of BNPL

• Interest-Free Payments: Most BNPL plans do not charge interest if repayments are made as scheduled

• Installment Plans: Payments are split over weeks or months, depending on the provider

• Credit Score Impact: Timely repayments may boost your credit score, while missed payments could negatively affect it

Benefits of BNPL

• Convenience: Enables you to buy items immediately without paying the full amount upfront

• Flexibility: Makes high-value purchases more affordable by breaking them into smaller parts

• No Interest: If payments are on time, there are no interest charges

Challenges of BNPL

• Debt Accumulation: Delayed or missed payments can attract penalties and lead to debt

• Regulatory Oversight: The sector is facing increased scrutiny to ensure consumer protection

• Market Crowding: With many providers offering similar services, terms and conditions can vary widely

BNPL in India (2025)

The BNPL market in India is projected to grow rapidly, with an estimated value of around ₹1.73 lakh crore (USD 21.95 billion) in 2025. This growth is driven by rising e-commerce usage and digital payment adoption. Consumers are increasingly turning to BNPL for both essential and discretionary spending.

Conclusion

BNPL can be a useful financial tool if used wisely. It offers spending flexibility and helps manage cash flow without interest, as long as you repay on time. In a growing digital economy like India, BNPL is changing how people view short-term credit. Always read the terms carefully before you commit. Make sure the repayments fit your budget comfortably.