‘Buy now pay later’ rises 200% during second Covid wave

‘Buy now, pay later’ marketing mantra, that boosted consumer culture in the country a few decades ago, got a shot in the arm during the second run of the pandemic this year when it grew as much as 200%, a recent survey showed.

A recent survey done by ZestMoney, India’s largest and fastest growing BNPL (buy now pay later) platform says consumer demand was up by more than 200% in the second phase of lock down, i.e. March-May 2021, as compared to the lock down last year, i.e. March to May 2020.

Five times jump

The survey revealed that customer applications for BNPL credit limit on the platform went up by 5 times in March-May 2021 period as more people took to planning their finances.

On e-commerce platforms BNPL transaction went up by more than 100% on a month-on-month basis in May 2021.

ZestMoney said most respondents were likely to spend on smart phones, electronics, fashion, home decor, water purifiers and air tickets in the coming months.

Over 53% respondents had opted for BNPL in June 2021 also.

57% of the total respondents stated that their finances were not impacted during phase II of the lockdown as phase I taught them a lot about emergency planning.

“We have seen encouraging signs in the second phase of the lockdown, signalling strong revival in consumer sentiment. Buy Now Pay Later continues to gain traction as customers look for financing options that allow them to manage their expenses better,” said Lizzie Chapman, chief executive officer and cofounder of ZestMoney.

Metro cities

The survey put three metro cities on top of the chart for taking BNPL facility for the specific time period, i.e. March-May 2021.

Delhi, Mumbai and Bengaluru are the top 3 metros witnessing highest BNPL transactions. On the other hand, Jaipur, Lucknow and Vishakhapatnam emerged as the top 3 non-metro markets.

Cities such as Kolkata, Chennai, Pune, and Chandigarh were placed in the second row.

Despite the slowdown of the economy due to the pandemic, ZestMoney witnessed that repayment efficiency improved significantly with many customers paying well within their repayment period.

The company witnessed an improvement of 40% in bounce rates, while NPAs were 34% less in phase II, compared to phase I of the lockdown.

“Interestingly, tier II and III markets witnessed stronger revival across parameters. It’s a well-rounded growth across categories from electronics to electric bikes,” said Lizzie Chapman.

How BNPL works

It provides instant credit without any hassle and repayment is to be made after a specified period of time. It is convenient as well as interest-free compared to its substitutes.

It is a big draw for small ticket purchases. For instance, for smaller purchases like going for a movie which may typically cost Rs 200-Rs 2,000 or for Swiggy or Zomato orders, people may use BNPL option. However, on the downside, the fear of increasing debt remains.

E-commerce platforms are offering BNPL aggressively right now. Smartphone, FMCG, Fashion and lifestyle retailers are offering this facility rather than credit card purchase.

The survey

The survey was conducted among 3,000 respondents across the country to understand consumer demand and their preferred financing options.

ZestMoney has 1 crore registered users and more than 3,500 online partners and almost 45,000 offline store partners.