Buy Now, Pay Later (BNPL)

Buy Now, Pay Later (BNPL) is a short-term financing product that allows consumers to purchase goods and services immediately while deferring payment — typically splitting the total amount into equal instalments over a period of weeks or months, often with zero interest if paid within the prescribed period. BNPL is offered at the point of sale — both online and offline — by fintech companies, banks, and payment platforms, and has grown rapidly as an alternative to traditional credit cards for younger, digitally native consumers. In India, BNPL products are offered by fintechs including LazyPay, Simpl, ZestMoney, and by established players like Flipkart Pay Later, Amazon Pay Later, and Bajaj Finserv's EMI Network. The RBI has regulated BNPL products as digital lending under its Digital Lending Guidelines (2022) — requiring lenders to disclose all charges, maintain a direct loan transfer to the merchant, and follow fair practice codes. For consumers, BNPL is useful for managing cash flow on essential purchases — but can become problematic if used for discretionary spending beyond repayment capacity, leading to revolving BNPL balances that attract penalties and damage credit scores. For investors analysing Indian fintech stocks and NBFCs, BNPL represents both a significant growth opportunity in India's underpenetrated consumer credit market and a credit quality risk, given the absence of extensive credit history data for many BNPL borrowers in India's largely thin-file credit population.