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.
[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.
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