Digital payments in India have grown by 300 percent since 2018, according to the Reserve Bank of India’s Digital Payments Index report. In what is traditionally a cash-driven market, this is extraordinary growth in India owing to increased internet penetration. Although UPI remains the most popular mode of online payments, another emerging trend is that of BNPL (Buy now pay later).
The latest trend is replacing the traditional way of availing credit using credit cards. The fact that only 3 out of 100 people own a credit card explains why we always needed a better and more advanced way to make credit available for all sections of society.
Credit card applications go through stringent checks and often get rejected. The gap has resulted in the increased adoption of BNPL instruments amongst the new age of customers. This calls for D2C startups to reflect on their checkout strategies and enable new-to-credit users to use BNPL to be able to grow and scale.
Leveraging BNPL to acquire new customers
The D2C story in India is successful because it has understood the needs of the customers better than the legacy brands. However, an area that still needs improvement is establishing trust through a better checkout experience. The new-age customers are increasingly exploring BNPL modes of payment for instant credit.
Offering a payment method like BNPL opens the gates of opportunities for online startups. This allows brands to reach out to an entirely new section of consumers while driving up the order values. Businesses that offer consumer credit are seeing their Average Order Value increase by 15 percent and 93 percent of new-to-credit users say that they will use consumer credit again. Interestingly, 30 percent of consumers who ended up making a purchase said they would have abandoned the cart had the consumer credit not been available at the time of purchase.
Competing with legacy brands, a method like BNPL provides D2C startups with an edge to build trust and ensure first-time consumers become repeat consumers.
How to choose the best payment gateway for BNPL?
The best way for D2C brands to offer BNPL services is to partner with trusted fintech companies so the processes are taken care of and brands can focus on their core offerings.
To choose the best payment gateway, here are a few things to keep in mind:
1. Brands need to determine the number of customers using the service. It will help in identifying the potential business growth that can be expected after the activation.
2. Some of the other factors that need to be considered are user limits, interest-free period, charges/pricing, customer KYC experience, and availability of EMI.
3. Ensure that proprietary services provided by payment gateway are better than the competitors.
Ride the BNPL trend with Paytm Postpaid
Paytm Postpaid is one of the popular platforms for the Buy-Now-Pay-Later model of consumer financing in the modern era. With this service, the Paytm payment gateway (Paytm PG) aims to enable startups to offer new-to-credit users as well as customers with existing credit histories who don’t have a credit card through an alternative financing option with a credit card-like payment experience.
Other than being a shopper-centric payment solution, BNPL comes with a lot of benefits for businesses too. With increasing competition in the D2C space, the fight to thrive is a tough one and implementing BNPL could make all the difference.
You can also checkout the Paytm Startup Toolkit here!
