Transforming Online shopping: Buy-Now-Pay-Later To Become Big in E-Commerce

Buy Now, Pay Later (BNPL) has grown very popular recently, especially among the millennials. So, what is BNPL? BNPL means that the consumer can make a purchase and opt to pay at a later date at no extra charge. It aims to make the consumer experience better to enable frictionless commerce.

BNPL solutions emerged in the early 2010s to address the pain points around financing – namely complexity and credit cards with high fees and APRs.  Recently, the ‘Buy Now, Pay Later’ model has brought a significant revolution in online shopping, especially with the younger crowd. Let’s get to know how Buy-Now-Pay-Later has become big in E-commerce and transformed online shopping.

Statistics Indicate That There Will Be A Surge In The Use of BNPL 

BNPL is bound to see a massive surge in the coming years. According to a report released by RedSeer – a management consulting firm in February this year, the Fintech subsegment is moving at 65% growth every year and is expected to hit a staggering $40 billion by 2025.

This is particularly true for India as more Indians (28%) are likely to use BNPL services in the next 12 months compared to consumers in other markets across the globe. This is as per a new report by global market research and data analytics firm YouGov. 

Why Is BNPL Becoming So Popular Among Indians And How Is It Changing The Face Of Online Shopping? 

The following are some of the reasons why BNPL is Popular among customers. 

Convenience and Affordability: 

It offers convenience and affordability in its present form. In   terms of convenience, you can pay later. This allows consumers to enjoy experiences and avoid the hassles of upfront payment with every transaction.

This is an interest-free payment option if it is paid within the repayment cycle of 15 days as done by LazyPay. Affordability is a very important aspect of BNPL. Consumers can buy desired products or services without any delay and pay later in small EMIs. EMIs range from 3 to 12 months with zero to minimal interest. 

Changes in customer experience:

Previously known as installment plans/payment plans, the ‘Buy Now, Pay Later’ model has an impact on the customer’s choice of products. This model allows customers to pay and stay committed with a brand. Simple funding options like BNPL improves the trust between retailers and consumers. 

Credit card use is on the decline: 

Since the beginning of the Covid-19 pandemic, the use of credit cards has been declining. This has been due to high interest rates, decreasing credit limits, and poorly implemented rewards programs. Currently, just three in every 100 Indians own a credit card.

Moreover, the tedious application process for credit cards adds to the hassles of young Indians who look forward to a quick and easy experience. According to the data released by RBI in March last year, only 62 million credit cards are in circulation in the country.  The decline of credit cards presents an opportunity for alternative payment methods, including Buy Now, Pay Later. 

Flexible way to buy:

For consumers who don’t carry cash and are not comfortable with using credit cards, BNPL provides flexible payment options. If you are currently at a store, payment approval is instant.

If you wish to order items for a later date, BNPL is a good option that enables you to pay immediately and ensure on-time delivery without any payment hassles.  

Provides interest-free payment facility:

 ‘Buy Now, Pay Later’ is a feasible and easy to use option for the younger generation of shoppers. BNPL offers many of the same  benefits as other modes of digital payments, but without any pain points, making it a viable option for the consumers.

Discounts and offers: 

BNPL is becoming a platform where customers search and find e-commerce items. Merchants are starting to use them as marketing channels where they offer discounts and promotions.

Now, how does BNPL benefit retailers?

Brings in new customers:

The ability to try before you buy has been a problem for online retailers. People like to see if things are good before buying and then like to purchase them. Buy now pay later providers give this opportunity to make this work in the online space.

Through features like free returns and dedicated support staff, organizations using BNPL can make this happen for consumers and give them flexibility when making purchases.

 It is easy to see offering free returns as a cost stink, but they are becoming an essential business tool. According to an UPS study, 66% of customers say they verify return policies pre buying. More than half of online shoppers do not approach stores with a strict returns policy. Businesses that see returns as a chance to build better relationships with their customers have better chances to succeed. 

Increased sales value: 

 Providers such as Klarna claim that the addition of a BNPL feature led to an increase of 33% in the value of sales at its client GymShark. QuadPay says merchants that have implemented its BNPL product for e-commerce have witnessed a 20 percent increase in conversions and a 60 percent increased average checkout value.  It is a way to ensure that revenue comes in without resorting to methods such as discounting. 


Customers who are aware that a particular option is available in an e-commerce store and have enjoyed the seamless customer experience are likely to return for purchases again. 

Reduced Cart Abandonment Rate: 

including BNPL at checkout can decrease the cart abandonment rate by 35% according to a Mastercard study. Most shoppers abandon carts and the reason for this is often claimed as window shopping. But this may not be true all the time.

BNPL can overcome these issues efficiently. For instance, if shoppers abandon carts for reasons such as not being able to find a suitable payment process and the products being very expensive, BNPL will be able to deny every reason as consumers can pay at their convenience and also split the price of costly products into affordable payments.  


Thus, BNPL has transformed online shopping for customers and retailers and will continue to do so. It is bound to become bigger and more popular in the future in eCommerce.