Buy now, pay later loans to disrupt the market

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New Delhi: Buy now pay later (or BNPL) loans are intended to disrupt the credit market with technology that allows lenders to easily provide bag-ticket loans, without the risks or costs associated with loans in this category . BNPL refers to technology credit that is given to borrowers at the point of sale as a payment option. Unlike credit cards, the credit decision is made on the spot using technology for the amount of the sale.
“With BNPL, banks and other lenders can reinvent credit. It’s like providing sachet-sized lines of credit to customers without having to bear the cost of the credit card infrastructure or the extensive personal loan process, ”said Yezdi Lashkari, Founder of Flexmoney Technologies – a company that allows BNPL loans for the best banks. in the countryside.
He added that the platform gives lenders the option of temporarily opening credit windows during festivals and hiking limits for a short time. Currently, lenders are increasing the limits before upcoming festivals. Besides Flexmoney, there are other players like Paytm, LazyPay, Simpl, Capital Float and ZestMoney which are active in the BNPL segment.
According to a report by Bernstein, the BNPL market in India is estimated at $ 15 billion with a potential of $ 100 billion by 2025. Fintech players would then represent 25% of the total market. Square’s recent acquisition of BNPL fintech Afterpay for $ 29 billion added to the buzz. Until now, BNPL credit has either been subsidized by sellers, such as mobile phone companies, which extend programs where the buyer does not pay any interest, or at interest rates comparable to those charged by cards. credit for EMI options.
Flexmoney is a fintech that brings together some of the biggest banks (HDFC Bank, ICICI Bank, Kotak, IDFC First Bank & Federal Bank) and other lenders on one side and retail and online merchants (Amazon, Flipkart, Vijay Sales, Urban Ladder) on the other. He is in talks with secured lenders such as home loan providers and gold lending companies to expand the BNPL market and significantly reduce the cost of credit. Lenders who already have a home loan or a gold loan can provide a top-up loan to the customer within seconds of paying.
According to Lashkari, Flexmoney will apply for an account aggregator license so that lenders can gain consent-based access to customer bank details and provide loans even to those who do not have a deposit account with them or to customers. without any TransUnion Cibil credit history.
What made BNPL possible is that banks have a database of almost 90 crore of accounts, including loans and deposits. They now have a list of clients to whom they can lend small amounts like, say, Rs 10,000. Companies like Flexmoney have the technology to provide merchants with little software that will allow them to include BNPL as a payment option. In the case of physical stores, the option appears on the swipe card machine screen while for online merchants it is a small javascript patch. A mobile number registered with the lender is enough to identify the borrower while an additional factor is required to release the payment.


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