Introduced recently, India's 'Buy Now, Pay Later' segment is poised to grow to $56 billion by FY26, said HDFC Securities. The new feature provides short-term financing to make immediate purchases and the credit can be paid back at a later date.
"India's BNPL is at an inflexion point with rising ecommerce and digital P2M payments fuelling deferred payments. BNPL GMV is poised to exhibit 74 per cent CAGR and account for 5 per cent of digital P2M payments by FY26E," HDFC Securities said.
"The proliferation of BNPL as a mode of credit-based payment is gaining significant traction, particularly amongst the millennials and Gen-Z population within a short span of time."
According to the brokerage house, the growth of BNPL segment is expected to be triggered on the back of rising ecommerce and digital payments penetration.
"BNPL players are exploring multiple business models and are yet to establish economic viability with limited revenue drivers and high delinquencies."
Besides, the brokerage house's report cited that although 'FinTech BNPLs' enjoy favourable regulatory arbitrage, incumbents have an opportunity to expand their customer funnels either through in-house offerings or partnerships.
"We expect regulatory convergence on the back of the RBI's recent narrative for digital lenders although 'FinTech BNPLs' are likely to sustain their superior user experience."
"Within a bouquet of BNPL options, credit cards remain the most exhaustive and profitable and, in fact, offer an up-sell opportunity for credit-tested top-of-the-BNPL-pyramid customers."