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Dvara Analysis Weblog | Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise


Purchase Now, Pay Later (BNPL) merchandise have develop into one of many common modes for patrons to make retail purchases in India. These merchandise are being positioned as challengers to bank cards that may make credit score extra accessible to clients at little to no price. But, the precise prices clients could incur haven’t been documented within the Indian context. Our report titled “The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise: Understanding the completely different sorts of prices Indian clients can incur in utilizing BNPL merchandise” makes an attempt to fill this hole.

Our findings on this report put the highlight on key points of the BNPL market, primarily –

    i. Financial prices that clients could incur once they use BNPL merchandise.

    ii. Conduct-related issues that BNPL clients could face and the following non-monetary prices that they might incur.

These findings are supposed to assist stakeholders achieve extra perception into the BNPL market and determine buyer safety gaps that have to be addressed.  

Analysis Methodology

The methodology we comply with on this examine presents a helpful method to monitor and determine buyer safety issues in nascent product markets. We examined the BNPL market primarily via two completely different approaches–

  1. Analysing phrases and circumstances (T&Cs) of ten distinguished Indian BNPL suppliers

    . We used the insights from this evaluation to (a) develop a financial prices matrix presenting the completely different prices clients could incur and (b) determine buyer safety gaps that may create important dangers for patrons.

  2. Utilizing BNPL merchandise personally.

    We registered and made a purchase order with a BNPL product from 5 of the ten suppliers. This helped us perceive the client expertise with every product and determine potential divergence with the fees and provisions talked about within the T&Cs. These experiences helped us refine our findings in (1).

Findings and takeaways for buyer safety

Our findings recommend that clients utilizing BNPL incur financial prices similar to prices of utilizing bank cards and are vulnerable to adversarial dangers rising from gaps in buyer safety. A few of our key findings embrace–

    a. The prices clients incur might be divided into pre-default and post-default prices.

    Pre-default prices embrace curiosity prices, processing charges, autopay charges, carry ahead curiosity, becoming a member of charges and card-related fees. The APR on BNPL merchandise diversified between 0 to 36%, processing charges diversified between 0 to fifteen% of the sanctioned quantity, and different fees diversified between INR 0 to INR 500. Submit-default prices contains late charges diversified with the excellent quantity and was often between INR 0 to INR 2000. Nevertheless, for some suppliers, like Unicard, the charges went as excessive as INR 3000 for dues between INR 2 lakhs to INR 10 lakhs. It’s unclear if the APR charged by BNPL suppliers is inclusive of all fees. If not inclusive, the financial prices of BNPL merchandise could also be nearer to that of bank cards. This must be validated with a bigger examine of prices incurred by clients over time

    b. BNPL suppliers’ T&Cs are misaligned with key buyer safety laws, contravening key conduct obligations

  • Some suppliers’ T&Cs and Key Details Statements (KFS) omitted key particulars concerning the BNPL product like the fees clients can incur.

  • Financiers retained the precise to reject purposes unilaterally with out giving causes for rejection.

  • Some suppliers explicitly maintain clients answerable for assessing suitability of the credit score being supplied. Different suppliers are silent about who’s accountable to evaluate suitability. ​

  • Some suppliers’ T&Cs had doubtlessly illegal provisions – like a waiver of buyer safeguards underneath usury legal guidelines and different legal guidelines referring to charging of curiosity. ​

  • Credit score reporting practices are hardly ever disclosed to clients. Suppliers additionally don’t disclose how utilizing BNPL merchandise can have an effect on clients’ credit score scores. 

  • Suppliers’ T&Cs have broad and ambiguous clauses relating to non-public knowledge use, giving suppliers leeway for utilizing private knowledge for broad functions. 

  • Some suppliers talked about the potential for charging an undisclosed, non-refundable processing charges for buyer purposes.

c. The onboarding course of for all suppliers was clean and absolutely digital however omitted essential details about the product

(like its prices). This data was not prominently displayed at first of the onboarding course of. These particulars had been solely accessible on the suppliers’ web sites.

d. BNPL suppliers could must align with the Cost and Settlement Methods Act, 2007 (PSSA).

At the moment, some BNPL suppliers appear to be settling funds immediately with retailers with out due authorisation from the RBI.

e. BNPL suppliers might also must align with the RBI Grasp Route on issuing bank cards, 2022.

It seems that BNPL merchandise could fall inside the scope of the definition of a bank card underneath the RBI’s Grasp Route on issuing bank cards launched in April 2022. If that’s the case, BNPL suppliers could must make important adjustments to their practices and enterprise fashions.

Our findings recommend that the financial and non-monetary prices related to utilization of BNPL merchandise are substantial and aren’t at all times recognized to the client earlier than subscribing to the product. The opacity across the prices mixed with some doubtlessly illegal clauses, reveal severe buyer safety dangers that BNPL debtors are uncovered to. These findings refute the narrative of BNPL merchandise as low- to no-cost credit score alternate options to bank cards.

Additional, The BNPL promise of credit score inclusion seems to be weakened by a set of things. The primary set of things could make BNPL merchandise much less reasonably priced for patrons. These components embrace (a) probably greater delinquency charges amongst BNPL clients which might in flip enhance credit score prices for suppliers and curiosity prices for future clients, and (b) a rise in prices to clients because of adjustments in BNPL supplier enterprise fashions and retailers’ pricing preparations. One other set of things could make BNPL merchandise and credit score much less accessible. These embrace (a) unexplained rejection of shoppers’ BNPL purposes, and (b) inconsistent reporting of shoppers’ repayments to credit score bureaus.  

The methodological method adopted on this examine can present a helpful template for market monitoring of nascent however quickly rising monetary merchandise. For example, our findings from the examine recommend that clients are at a danger of (a) unknowingly incurring debt, (b) borrowing credit score that’s unsuitable for them, and (c) being topic to potential harms from weaker buyer safety safeguards. These findings align with these from regulatory investigations into the BNPL market in markets with extra mature BNPL merchandise. Regulators and suppliers should be aware of these penalties to plot measures to enhance buyer safety within the BNPL market. 

The complete report is obtainable right here.

Cite this weblog:


Srinivas, M., & Prasad, S. (2022). Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise. Retrieved from Dvara Analysis.


Srinivas, Madhu and Srikara Prasad. “Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise.” 2022. Dvara Analysis.


Srinivas, Madhu, and Srikara Prasad. 2022. “Report: The prices of utilizing Purchase Now, Pay Later (BNPL) merchandise.” Dvara Analysis.


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