Over the past several years, the buy-now-pay-later (BNPL) segment of the fintech domain has been growing steadily. Digital lenders have used this offering as a way to reach people who do not have access to typical payment options like credit cards or those who are simply reluctant to use them.
Recently, as companies adapt to the changes brought on by the pandemic, major players like Amazon, Flipkart and BYJU’s and legacy banks like ICICI Bank and Axis Bank have entered this space. Their aim being to cater to an even wider audience. While credit and debit cards continue to be the most widely used payment forms worldwide, more and more consumers are considering and/or using alternative digital payments systems.
As mentioned, these payment systems have been accelerated in this post-COVID world. The companies in this space provide consumers with easy access to collateral-free loans and charge a low-interest rate varying between 0 to 24%. Even better, they offer both large-ticket financing and small-ticket funding to ensure they meet the varied requirements borrowers are looking for.
The biggest factors that have fueled the sector’s rise include:
- Low credit card penetration (stands at just 3%),
- Lack of short-term institutional lending,
- Predatory interest rates by private lenders,
- And the unprecedented boom in online sales.
Taking a closer look at industry numbers definitely supports this trend. According to a recent media report, gross transactions in the BNPL space jumped to $1.5-2 billion in just 18 months, compared to the few million it was sitting at in 2019. And the growth doesn’t stop there. India’s BNPL sector alone is expected to reach an astonishing $100 billion by the end of 2023.
How India is Taking on the BNPL Space
Headquartered in Bangalore, India, Simpl is a small-ticket, mobile-first platform that offers easy credit at points-of-sale (PoS) and ecommerce checkouts. The credit range it provides is INR 1.5-20K for a 15-day cycle, with no interest. Charging just a small penalty as a late fee. Simpl boasts more than 25 million approved users, and the company says that more than 90% of its monthly users are repeat users.
In addition to building its B2C (business-to-customer) credit line, Simpl has worked with thousands of merchant partners to develop an integrated payment option for them. Digital shoppers are able to complete their purchases on merchant platforms with a convenient one-click checkout. The simplicity of the process and ease of usage continues to result in multiple or even repeat purchases.
“Simpl’s offering enables the introduction of trust between the retailer and consumer by introducing a ‘khata’ like settlement of transactions post-purchase. In addition, Simpl delivers a transaction success rate of 99%+ to online retailers as opposed to the industry average where payment failures are around 20-30%”, says Nitya Sharma, CEO and cofounder, Simpl.
As of right now, the company works with more than 5,500 merchant partners. It also caters to major players like foodtech and delivery giant Zomato. It also boasts that it has improved the conversion rate up to 65% for its merchant partners. In short, Simpl is out in front of the many changes taking place in the payments industry and helping reveal just what the future has in store for those who adapt and jump at new opportunities.
Content crafter Alex Wilmont has been active in the payments industry, covering topics and industry news like Pinwheel Pay, for over 15 years. He lives simply, gives generously and loves his 2 dogs. His mission is to enhance and innovate the fintech industry for years to come.
