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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 standard modes for purchasers 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 could incur haven’t been documented within the Indian context. Our report titled “The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise: Understanding the totally 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 elements of the BNPL market, primarily –

    i. Financial prices that prospects could incur once they use BNPL merchandise.

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

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

Analysis Methodology

The methodology we comply with on this examine presents a helpful approach to monitor and establish buyer safety considerations in nascent product markets. We examined the BNPL market primarily by means of two totally different approaches–

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

    . We used the insights from this evaluation to (a) develop a financial prices matrix presenting the totally different prices prospects could incur and (b) establish buyer safety gaps that may create important dangers for purchasers.

  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 shopper expertise with every product and establish potential divergence with the fees 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 inclined to opposed dangers rising from gaps in buyer safety. A few of our key findings embody–

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

    Pre-default prices embody curiosity prices, processing charges, autopay charges, carry ahead curiosity, becoming a member of charges and card-related fees. The APR on BNPL merchandise assorted between 0 to 36%, processing charges assorted between 0 to fifteen% of the sanctioned quantity, and different fees assorted between INR 0 to INR 500. Submit-default prices consists of late charges assorted with the excellent quantity and was often between INR 0 to INR 2000. Nevertheless, 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 fees. 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 examine of prices incurred by prospects over time

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

  • Some suppliers’ T&Cs and Key Information Statements (KFS) omitted key particulars in regards to the BNPL product like the fees prospects can incur.

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

  • Some suppliers explicitly maintain prospects accountable for assessing suitability of the credit score being provided. 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 beneath usury legal guidelines and different legal guidelines regarding charging of curiosity. ​

  • Credit score reporting practices are not often 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 private information use, giving suppliers leeway for utilizing private information 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 absolutely digital however omitted vital details about the product

(like its prices). This data was not prominently displayed at the beginning of the onboarding course of. These particulars had been solely accessible on the suppliers’ web sites.

d. BNPL suppliers could have to align with the Fee and Settlement Programs Act, 2007 (PSSA).

At the moment, some BNPL suppliers appear to be settling funds straight with retailers with out due authorisation from the RBI.

e. BNPL suppliers might also have to align with the RBI Grasp Course on issuing bank cards, 2022.

It seems that BNPL merchandise could fall inside the scope of the definition of a bank card beneath the RBI’s Grasp Course on issuing bank cards launched in April 2022. In that case, BNPL suppliers could must make important modifications 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 usually are not at all times identified to the shopper earlier than subscribing to the product. The opacity across the prices mixed with some probably illegal clauses, reveal severe buyer safety dangers that BNPL debtors are uncovered to. These findings refute the narrative of BNPL merchandise as low- to no-cost credit score 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 reasonably priced for purchasers. These elements embody (a) probably greater delinquency charges amongst BNPL prospects which might in flip improve credit score prices for suppliers and curiosity prices for future prospects, and (b) a rise in prices to prospects as a result of modifications 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 embody (a) unexplained rejection of consumers’ BNPL functions, and (b) inconsistent reporting of consumers’ repayments to credit score bureaus.  

The methodological strategy adopted on this examine can present a helpful template for market monitoring of nascent however quickly rising monetary merchandise. As an illustration, our findings from the examine counsel that prospects are at a danger 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 pay attention to these penalties to plan measures to enhance buyer safety within the BNPL market. 

The total report is offered 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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