Buy Now Pay Later (BNPL) is a kind of line of credit where the service provider gives the subscriber a credit limit to make payments for an expense and the subscriber repays the amount consumed or credit later to the service provider, either in full or in part (possibly the full amount plus a payment).
Best BNPL Apps in India
Zest Money BNPL
Zest app can be downloaded to get the installation of BNPL with no interest and no membership fees. One can get a credit limit of up to INR two lakh, depending on the credentials of the applicants. This application is accepted by both 10,000 online stores and 75,000 physical retail stores.
Zest Money makes the payment on behalf of the user and then converts these total payments into two or three EMIs without any interest. The number of IMEs can be up to 12. To change the agreed duration of the IME, an additional fee will be required.
Penalty: There is a penalty of INR 250 for failing an IME.
Some of the major partners include Amazon, Flipkart, Uber, Samsung, among others.
With this app, one can pay bills and make purchases at more than 25,000 online and offline outlets. There are no processing fees at this time. The maximum amount provided by the company is INR 10,000 per month. The invoicing cycle is one month, which means that the amount spent must be reimbursed during this cycle, the invoice is generated on the 5th of each month. This amount is totally interest free in this period.
Some of the partner companies include Swiggy, Zomato, Myntra.
Paytm provides line of credit up to 60,000 using this app. It can be used anywhere Paytm payments are accepted, which includes more than five lakh offline and online stores. This line of credit is again available interest-free for a monthly billing cycle.
Paytm partners are spread across all areas and localities in India.
This BNPL is designed for self-employed people and more specifically for businessmen, where they get a credit line of up to INR 25 lakh to make purchases for 14 days without interest. This app provides reward points on using this credit limit. Which is equivalent to part of the money consumed. People who don’t need the credit can also use it to earn rewards points.
Penalty: It’s quite simple with people who don’t pay the company. There is a flat 3% penalty on the amount in default each month.
They have partnered with some of the biggest wholesale brands in India.
Postal code MobiKwik
Money from MobiKwik ZIP can be transferred to banks to make payments and used to pay bills and buy goods offline and online, buy train tickets, etc. Subscribers can get credit of up to INR 30,000 interest free within one billing cycle. Going over the billing cycle would mean that the business is entitled to charge interest on the line of credit. The billing cycle is 21 days. The ability to convert outstanding to EMI is not available.
- There is a subscription fee of INR 99.
- The wallet transfer to the bank is charged at the rate of 3.95% + GST.
- There is a wallet inactivation fee if the subscriber does not log into the account and this can be between 100 and 400 (depending on the years).
Penalty for non-payment of the invoice:
Some of the partners include Zomato, Amazon, Myntra, etc.
Flipkart Pay Later
Flipkart has introduced its own version of BNPL, where the company provides a credit limit of up to one lakh. This service can only be used to make purchases at Flipkart, Flipkart retail, Myntra, and 2GUD, all of which are affiliates of Flipkart. To benefit from the interest-free credit, the monthly bill for the previous month must be paid before the 5th of each month. The option to convert the purchase to EMI is also available, but this limit is less than the total line of credit provided for the same account.
OlaMoney postpaid and wallet
This app offers cashback on partner app spend, max cashback can be 30% with different upper limit from company to company. It also has the option of OlaMoney wallet. Late fees are charged on the 1st, 31st, 61st and 80th days after the due date. There are no late fees after the 80th day. The maximum line of credit is INR 25,000 which is available for a 30 day billing cycle after which there will be a penalty.
Some of the partners include Medlife, Netmeds, Bookmyshow, etc.
What you need to know before opting for BNPL
IME Schedule: EMIs are free for a few months, if one pays the amount due within that time, it will not be interest free, but beyond that time, nominal interest will be charged (nominal compared to other landing tools ).
Precaution: Users must be punctual in the payments of these EMIs, as a default will hurt their credit score.
Increase in credit score: For a better credit limit, you need to have a better credit score, but companies also offer this option to people with bad credit. With progressive use, your credit limit is increased.
BNPL can also be used to improve your credit rating, as paying your EMIs regularly will get you a better score, especially people who have in the past defaulted on their loans and credit card bills .
Where to use: This BNPL facility can be used with the service provider’s partner companies; the more partners the better for consumers.
Charges: BNP companies cannot charge any interest if payments or EMIs are paid on time, but if not, interest is charged; which is in most cases more than the interest charged by personal loans. None of these societies have annual dues and only a few have membership fees.
Is the BNPL for you?
BNPL caters only to those who are sure of reimbursements in line with company standards. Failure to do so will result in penalty charges, which may exceed expectations. As already mentioned, non-payment could potentially ruin an individual’s credit rating, making it difficult for them to apply for future loan opportunities.
BNPL is ideal for those in the following circumstances:
- Borrowers with a certain salary or income from a fixed source.
- Businessmen who lack liquidity.
- Those who wish to improve their credit ratings.
- Those who want to use it as a cashless tool for hassle-free transactions and then pay the service provider in full.
It is not at all recommended for people who are uncertain about their income and for those who do not see any steady flow of money in the near future. These people should opt for personal loans instead, based on specific criteria and requirements.