Buy Now, Pay Later (BNPL): The New Financial Toy

Buy Now, Pay Later (BNPL): 

The New Financial Toy

As the festive season approaches, the air is thick with anticipation. Current GST rates may be reduced before Deepavali fuelling consumer expenditure for automobiles, AC, fridge, TV, washing machine, etc. That may dispel the despondency ushered in by Trump’s tariff terrorism and significantly boost the economy.

Whether it’s the latest smartphone, laptop, a sleek new TV, refrigerator, a designer saree, or a long-overdue family vacation, the question isn’t just what to buy, but how to pay for it. Will you draw from your savings, swipe your credit card, opt for a zero-interest EMI, or try the increasingly popular Buy Now Pay Later (BNPL) option?

BNPL is the shiny new toy in the financial playground. But is it a tool of empowerment or a slippery slope into debt? Let’s take a quick look at this new credit instrument through the lens of economics, culture, and common sense.

BNPL vs Credit Cards vs Bank Loans

BNPL allows small-ticket purchases split into weekly or monthly instalments, often interest-free if repaid on time. Unlike a bank loan, it is quick, digital, and needs minimal paperwork. Unlike credit cards, it is not revolving credit with steep 30–40% annual interest rates. And unlike the “zero-interest EMI” schemes of earlier decades, it is not tied to specific merchants.

Incidentally, ‘Buy Now & Pay in Instalments’ is not a recent marketing innovation. It was pioneered by Isaac Merritt Singer, the inventor of the home sewing machine, and Edward Clark, his lawyer and partner in 1857 for selling sewing machines in instalments with great success. That was an important milestone in the advent of credit economy.

In India, players like Amazon Pay Later, Flipkart Pay Later, Paytm Postpaid, LazyPay, and others offer BNPL options. Globally, Klarna (Sweden), Afterpay (Australia), and Affirm (USA) dominate.

Is BNPL new?

A new name for a payment modality that has been in use since long. All postpaid facilities and bills – electricity, newspaper, milk, phone, wi-fi, monthly wages for household help – are essentially BNPL. Credit card is also BNPL, though such a card is issued after due diligence about the customer’s credit-worthiness by the issuing bank.

Charvak vs Kautilya

Save or splurge; provide for unforeseen risks and old age or borrow to enjoy life now?

Long before the cool millennial moto of YOLO, Charvak had propounded the same philosophy:

“यावज्जीवेत् सुखं जीवेत् ऋणं कृत्वा घृतं पिबेत्।”
“Live happily as long as you live; borrow, indulge, and enjoy LIFE.”

Other thinkers, philosophers, and writers counselled prudence and thrift. Kautilya supported the use of credit for productive enterprises but not for personal consumption (ऋणं शत्रुः – Debt is like an enemy). Rabindra Nath Tagore flagged the perils of money-lending in his story about Kabuliwallah’s long years in jail. Shakespeare advised - ‘neither a borrower nor a lender be’ (Hamlet); and warned about Shylock, the loan-shark who would accept nothing but his ‘pound of flesh’ (The Merchant of Venice).

Indians mostly ignored Charvak, the hedonist and became steadfast followers of ‘Save First, Spend Later’ making India’s Domestic Savings Rate among the highest in the world. But the rapid adoption of digital economy, particularly by the youth, may usher in a cultural shift in the years to come.

BNPL by the Numbers: India & Beyond

In India, millennials and Gen Z are driving the surge in BNPL market which is projected to grow from USD 4.03 billion in 2025 to USD 26.6 billion by 2032 (CAGR ~30.9 %).

Worldwide, the BNPL market is expected to reach USD 560.1 billion in 2025, growing at an annual rate of ~13.7 %, and projected to hit USD 911.8 billion by 2030.

Savings Rate vs. BNPL Adoption & Credit Culture

There may be an inverse relationship between Savings Rate and BNPL adoption, though not always.

Countries with low savings rates (e.g., USA, UK, Australia) tend to have high BNPL adoption and credit card penetration. These economies rely more on consumer spending, supported by easy access to credit and strong social welfare systems.

Despite a high savings rate, BNPL is growing rapidly in India—especially among millennials and Gen Z, who are more comfortable with digital credit and less tied to traditional saving norms. BNPL fills a gap for those without credit cards or formal loan access, offering short-term liquidity without the stigma of debt.

BNPL adoption signals a generational shift from precautionary saving to convenience-driven consumption, especially in urban India.

Risks & Observations

BNPL users often show lower financial literacy, impulse buying, and higher debt accumulation. In high-saving cultures like India and China, BNPL may coexist with savings—but could erode long-term prudence if unchecked.

India’s high savings rate is a cultural asset, but BNPL is reshaping the landscape. The challenge is to balance access with awareness—ensuring that financial innovation doesn’t dilute fiscal discipline.

The Road Ahead

BNPL is here to stay. For responsible borrowers, it offers flexibility and convenience. For reckless ones, it risks snowballing into hidden debt. Regulators, including the RBI, are moving cautiously—insisting on transparency, capping charges, and bringing BNPL into the formal credit reporting system.

Ultimately, the choice remains personal. Are you highly conservative and avoid borrowing altogether? Or do you follow Charvaka and borrow boldly for pleasure? Most of us walk a middle path—balancing needs, means, and dreams.

As the festive season approaches, perhaps the better question is not whether you use BNPL, a credit card, or a loan—but whether you truly need that new phone or vacation. Sometimes the smartest financial move is simply to say, not now.

Amazon Pay Later

When buying stuff from Amazon, you have the freedom to choose your mode of payment – credit or debit card, UPI, net-banking, cash-on-delivery, EMI, or Amazon Pay Later (APL). APL offers BNPL facility with instant approval of up to INR 60000 credit limit which you may use to buy now and pay after 30 days.  

I always pay in advance for my grocery purchases – dal, chawal, atta, and similar stuff - but wished to try APL, a new facility, keyed in the required details. As promised, APL decided in less than a minute.

Sorry

We regret to inform you that your Amazon Pay Later loan application cannot be processed further, based on our underwriting policies & regulatory guidelines.

Continue Shopping

Why, I wondered? I’ve never defaulted on any credit card payment, have no outstanding loans, and my credit rating is high - 824/900. Why, then, did APL not find me eligible? Then, I got it in a flash. APL must have regretted basis my age. (Hey, Amazon! That’s agism!). BNPL is for young folks who have decades of work-life ahead of them. Extending BNPL to a senior citizen and pensioner is fraught with high risk. What if when the moment for PL (Pay Later) arrives, the borrower has become Late Borrower?

BNPL coz YOLO

Bruh, who TF is even saving for old age anymore? SFSL? Junk that duddy-fuddy-granny rule. Dead serious—do you really lose sleep over retirement, amassing jaydaad for saat peedhi, or other NPC-level problems from the distant future? Why not vibe in the H&N, be Cool and enjoy while the CoY is full?

Why SaS for a fam you might never even have? Aren’t we HS, DINK, or straight-up FTF squad? YOLO, fam. So why not cop that gadget, lock in that Maldives vacay, or just max out on BNPL and keep it lowkey? Adulting can wait, right?

There may not be many millennials among my readers, yet this blog is about them and their lifestyle. Hence the two preceding paras which may befuddle others - uncles, aunties, and oldies - who may check end-notes to decipher millennial-speak.[i]

Comments

C P Singh

A very well researched blog. Let me offer two quick notes---

1. Rabindra Nath Tagore was personally aware of the hazards of debt. His grandfather Sir Dwarakanath Tagore, aka the  “Prince of Calcutta" had made fortunes in diverse businesses but in his  last days had incurred huge losses and had to resort to borrowing. Eventually, to repay the debt he had to sell off several assets.

2.  About 20 years ago, a friend in Ahmadabad had met a kirana shop owner practicing this same marketing strategy – BNPL. My friend and his wife had gone to Thal Tej, then a newly developing area, to check-up on a house they wished to buy. While returning home, his wife stopped at a random shop and bought groceries. However, since they didn’t have enough cash to settle the bill, they wanted to return some items upon which the shop owner said:

आप सामान ले जाइए और बाद में पैसा दे दीजिएगा। मेरे दोस्त के यह कहने पर कि वे उस एरिया में रहते नहीं और पता नहीं कब फिर वहां आयें तो दूकानदार ने कहा कोई बात नहीं घर के लिए खाने का सामान है तो आप ले जाइए और जब भी कभी इधर आना हुआ तो पैसे दे दीजिएगा। मेरे दोस्त ने यहां तक कहा कि हो सकता है वे इधर आयें ही न । तब भी दूकानदार ने सामान वापस नहीं लिया और कहा कि कोई बात नहीं। तो मजबूरन मेरे दोस्त को सारा सामान घर ले आना पड़ा।

Of course, he went back a few days later and settled the bill but since then he has been buying all his groceries from that shop.

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[i] Millennial Slangs & Acronyms

•        Bruh / Fam → casual, inclusive opener

•        TF → The Future and the slangy abbreviation for "the f***" (double pun).

•        SFSL → Save First Spend Later

•        NPC-level problems → pop-culture slang for boring, background worries.

•        Vibe → hang out, enjoy.

•        H&N → Here & Now

•        CoY → Cup of Youth

•        SaS → Slog and Save

•        HS → Happily Single

•        DINK → Double Income No Kids

•        FTF → Forget the Future; F*** the Future

•        YOLO → You Only Live Once

•        Cop → buy something you want.

•        Vacay → vacation, casual tone.

•        Lock in → confirm a deal.

•        BNPL → Buy Now Pay Later

•        Lowkey → do it quietly, not making a big deal.

•        Adulting → slang for handling grown-up responsibilities.