The rise of pay later phenomenon in India

Good Morning,

In a country like India, where finance is quite fragmented, hard to access, and inundated with processes and paperwork, BNPL (buy now pay later) positions itself as a hassle-free, ready-to-use product — and it has been well-received, especially in lower-tier cities and rural areas, where formal financing is no better than a pipedream.

These are small-ticket loans that power online and offline purchases mostly via apps that function much like a Paytm or a PhonePe when it comes to making instant payments. 

Several startups, including LazyPay, Simpl, ZestMoney, and ePayLater, operating in this space have, essentially, changed the way credit works in India.

In the last 18 months, online shopping has seen a spike, mostly from lower-tier cities as people took to the internet to order groceries, other essentials, clothes, utility items, and more amid the pandemic.

On the flipside, layoffs, a tight employment market, salary cuts, and suspension of increments has added to people’s cost of living expenses —  forcing them to consider credit options to stave some of the financial pressure off.

All this has resulted in strong demand for credit and BNPL players have been able to capture a lot of that market. Seeing the success, even traditional banks and ecommerce companies have launched their own BNPL plays.  Read more.

The Interview

Are you a fintech startup, banking professional, or fintech enthusiast looking to transform your business into a digital-first enterprise by 2025? Don’t miss out on the third episode of 'Digirupt Finance: Conversations around Digital Innovations in Fintech' by Comviva.

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News & Updates

• Sequoia Capital India promoted five members to their leadership team. While Ashish Agarwal and Harshjit Sethi were promoted as managing directors in the venture team, Ishaan Mittal, Tejeshwi Sharma, and Sakshi Chopra joined the growth investing team.

• First Solar Inc said it is planning to invest $684 million (about Rs 5,000 crore) to set up a photovoltaic thin-film solar module manufacturing facility in India. The company said this is subject to permittance and approval of Indian government incentives.

• GE Healthcare has selected six Indian startups under its 'Cohort 3' programme to help them build and scale up their technologies. The selected startups are 4basecare, Haystack Analytics, zMed Healthcare Technologies, Tricog, Aira Matrix, and Qritive.

• Social enterprise incubator Villgro announced its fifth edition of the social startup discovery platform – iPitch 2021. Launched with Switzerland-based Artha Impact, iPitch will provide $5 million to India’s social startups.

• Industry chamber CII has agreed with the Serum Institute of India (SII) to accelerate COVID-19 vaccination in small towns and rural areas. The chamber said the partnership with Serum Institute will help catalyse industry participation to reach out to communities at large.

Before you go, stay inspired with… 

“We don't believe that people need to go to banks and take out heavy loans to finance their purchases. These can be financed instantly, at the checkout, using technology and data intelligence. This is exactly what we have envisioned to build ZestMoney.”

— Lizzie Chapman, CEO, ZestMoney