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Dvara Analysis Weblog | Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise


Purchase Now, Pay Later (BNPL) merchandise have develop into one of many fashionable modes for patrons to make retail purchases in India. These merchandise are being positioned as challengers to bank cards that may make credit score extra accessible to prospects at little to no price. But, the precise prices prospects might incur haven’t been documented within the Indian context. Our report titled “The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise: Understanding the completely different sorts of prices Indian prospects can incur in utilizing BNPL merchandise” makes an attempt to fill this hole.

Our findings on this report put the highlight on key points of the BNPL market, primarily –

    i. Financial prices that prospects might incur after they use BNPL merchandise.

    ii. Conduct-related considerations that BNPL prospects might face and the following non-monetary prices that they could incur.

These findings are supposed to assist stakeholders achieve extra perception into the BNPL market and establish buyer safety gaps that should be addressed.  

Analysis Methodology

The methodology we observe on this research presents a helpful strategy to monitor and establish buyer safety considerations in nascent product markets. We examined the BNPL market primarily by two completely different approaches–

  1. Analysing phrases and circumstances (T&Cs) of ten outstanding Indian BNPL suppliers

    . We used the insights from this evaluation to (a) develop a financial prices matrix presenting the completely different prices prospects might incur and (b) establish buyer safety gaps that may create vital dangers for patrons.

  2. Utilizing BNPL merchandise personally.

    We registered and made a purchase order with a BNPL product from 5 of the ten suppliers. This helped us perceive the client expertise with every product and establish potential divergence with the costs and provisions talked about within the T&Cs. These experiences helped us refine our findings in (1).

Findings and takeaways for buyer safety

Our findings counsel that prospects utilizing BNPL incur financial prices similar to prices of utilizing bank cards and are prone to adversarial dangers rising from gaps in buyer safety. A few of our key findings embrace–

    a. The prices prospects incur will be divided into pre-default and post-default prices.

    Pre-default prices embrace curiosity prices, processing charges, autopay charges, carry ahead curiosity, becoming a member of charges and card-related prices. The APR on BNPL merchandise different between 0 to 36%, processing charges different between 0 to fifteen% of the sanctioned quantity, and different prices different between INR 0 to INR 500. Put up-default prices consists of late charges different with the excellent quantity and was often between INR 0 to INR 2000. Nonetheless, for some suppliers, like Unicard, the charges went as excessive as INR 3000 for dues between INR 2 lakhs to INR 10 lakhs. It’s unclear if the APR charged by BNPL suppliers is inclusive of all prices. If not inclusive, the financial prices of BNPL merchandise could also be nearer to that of bank cards. This must be validated with a bigger research of prices incurred by prospects over time

    b. BNPL suppliers’ T&Cs are misaligned with key buyer safety rules, contravening key conduct obligations

  • Some suppliers’ T&Cs and Key Details Statements (KFS) omitted key particulars concerning the BNPL product like the costs prospects can incur.

  • Financiers retained the proper to reject functions unilaterally with out giving causes for rejection.

  • Some suppliers explicitly maintain prospects answerable for assessing suitability of the credit score being supplied. Different suppliers are silent about who’s accountable to evaluate suitability. ​

  • Some suppliers’ T&Cs had probably illegal provisions – like a waiver of buyer safeguards below usury legal guidelines and different legal guidelines referring to charging of curiosity. ​

  • Credit score reporting practices are hardly ever disclosed to prospects. Suppliers additionally don’t disclose how utilizing BNPL merchandise can have an effect on prospects’ credit score scores. 

  • Suppliers’ T&Cs have broad and ambiguous clauses relating to non-public knowledge use, giving suppliers leeway for utilizing private knowledge for broad functions. 

  • Some suppliers talked about the opportunity of charging an undisclosed, non-refundable processing charges for buyer functions.

c. The onboarding course of for all suppliers was easy and totally digital however omitted vital details about the product

(like its prices). This info was not prominently displayed in the beginning of the onboarding course of. These particulars had been solely out there on the suppliers’ web sites.

d. BNPL suppliers might must align with the Cost and Settlement Programs Act, 2007 (PSSA).

Presently, some BNPL suppliers appear to be settling funds immediately with retailers with out due authorisation from the RBI.

e. BNPL suppliers can also must align with the RBI Grasp Course on issuing bank cards, 2022.

It seems that BNPL merchandise might fall inside the scope of the definition of a bank card below the RBI’s Grasp Course on issuing bank cards launched in April 2022. If that’s the case, BNPL suppliers might should make vital adjustments to their practices and enterprise fashions.

Our findings counsel that the financial and non-monetary prices related to utilization of BNPL merchandise are substantial and should not at all times identified to the client earlier than subscribing to the product. The opacity across the prices mixed with some probably illegal clauses, reveal critical buyer safety dangers that BNPL debtors are uncovered to. These findings refute the narrative of BNPL merchandise as low- to no-cost credit score alternate options to bank cards.

Additional, The BNPL promise of credit score inclusion seems to be weakened by a set of things. The primary set of things could make BNPL merchandise much less inexpensive for patrons. These components embrace (a) presumably increased delinquency charges amongst BNPL prospects which may in flip enhance credit score prices for suppliers and curiosity prices for future prospects, and (b) a rise in prices to prospects attributable to adjustments in BNPL supplier enterprise fashions and retailers’ pricing preparations. One other set of things could make BNPL merchandise and credit score much less accessible. These embrace (a) unexplained rejection of shoppers’ BNPL functions, and (b) inconsistent reporting of shoppers’ repayments to credit score bureaus.  

The methodological method adopted on this research can present a helpful template for market monitoring of nascent however quickly rising monetary merchandise. For example, our findings from the research counsel that prospects are at a threat of (a) unknowingly incurring debt, (b) borrowing credit score that’s unsuitable for them, and (c) being topic to doable harms from weaker buyer safety safeguards. These findings align with these from regulatory investigations into the BNPL market in markets with extra mature BNPL merchandise. Regulators and suppliers should be aware of these penalties to plan measures to enhance buyer safety within the BNPL market. 

The total report is on the market right here.

Cite this weblog:


Srinivas, M., & Prasad, S. (2022). Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise. Retrieved from Dvara Analysis.


Srinivas, Madhu and Srikara Prasad. “Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise.” 2022. Dvara Analysis.


Srinivas, Madhu, and Srikara Prasad. 2022. “Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise.” Dvara Analysis.



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