India’s BNPL Revolution: A New Era for Digital Credit and Consumer Empowerment

How BNPL works and why Indian consumers are embracing it

The Buy Now, Pay Later (BNPL) model is redefining how Indian customers approach credit. Rather than paying the full amount upfront, BNPL allows customers to split transactions into smaller, interest-free instalments, often right at the checkout point.

This seamless access to deferred payment has found strong resonance with both online and offline customers, especially during high-spend periods such as festivals and promotional events.

India’s Buy Now, Pay Later (BNPL) market was valued at USD 15.37 billion in 2024 and is expected to grow steadily at an annual rate of 11.70 percent, reaching USD 44.90 billion by 2033. This growth is supported by digital adoption and rising demand for flexible credit.

Strategic alliances between BNPL providers and large retailers are improving accessibility, particularly among customers with limited access to traditional financial products. These partnerships create mutual benefits: retailers expand their customer base, while customers gain instant and frictionless financing options.

Consumer behaviour is changing, and BNPL is at the centre of it

India's evolving consumer behaviour shows a growing inclination towards flexible and digital-first payment solutions. BNPL is gaining popularity among younger demographics and first-time credit users, especially in tier-2 and tier-3 cities where access to conventional credit remains restricted.

By offering instant credit without paperwork, BNPL platforms are enabling more Indians to engage in e-commerce spending. Moreover, the surge in mobile wallet usage and UPI-based transactions is further catalysing BNPL adoption. A recent survey revealed that 90% of urban customers prefer digital payment methods for online purchases.

Furthermore, the integration of BNPL into e-commerce platforms significantly enhances the user experience at checkout, reducing cart abandonment by 51% and increasing order values by up to 30%. This improved user experience is fuelling deeper market penetration.

From trend to transformation – what BNPL means for India’s lending future

The rapid evolution of BNPL in India signals a broader shift in lending standards. Financial institutions and fintechs are increasingly focusing on underserved markets, developing personalized repayment models to cater to diverse customer needs.

The BNPL sector is also gaining expansion into non-traditional segments such as healthcare, travel, and education, offering customers new ways to manage high-value expenses more affordably.

Regulatory frameworks are emerging to ensure responsible lending, enhance transparency, and build customer trust. As competition among BNPL providers intensifies, innovation is expected to accelerate in areas such as loyalty rewards, digital onboarding, and embedded credit solutions.

The convergence of UPI and pre-approved credit lines will simplify access to credit in smaller towns, turning BNPL into a default credit mechanism for many customers. Over the next few years, this ecosystem will play a pivotal role in making credit more inclusive, efficient, and tailored to the digital economy’s demands.