Festival Sale: Trend or Trap?

The festive season is almost here, and with this, it brings festive sales. E-commerce giants have announced Festival sale, one of the biggest annual sales that the company hosts each year. They are offering discounts, exchange offers, no-cost EMI options and more across a wide range of products. Sale results in impulsive buying.

In addition, GenZ consumers, young millennials, and first-time credit borrowers, who are typically overlooked or underserved by traditional banks, choose Buy Now Pay Later since it is so easy to acquire credit but BNPL service must be used with precautions otherwise it will lead to a debt trap when a person is unable to pay the amount. BNPL has become popular among millions of young consumers who are short on cash and don’t have a standard credit card. In India, several online retailers and financial institutions provide short-term financing options, making it a practical substitute for credit cards.

 

Different platforms providing BNPL facility:

·         Simple

·         LazyPay

·         ZestMoney

·         Paytm Postpaid

·         Amazon Pay Later

·         Flipkart Pay Later

 

Pros

• Convenient, disciplined way to pay for purchases over time
• Frequently zero-interest or lower interest than credit cards
• Good credit/high credit score is not necessary to qualify
• Fast approval

Cons

• Payments can be hard to track
• Missing or late payments result in late fees, damaged credit score
• No rewards or cash back earned on purchases
• Payments may continue even if an item is returned

By 2024, Goldman Sachs projects that the Indian e-commerce market would be worth $99 billion. According to Worldpay’s Global Payments Report, BNPL will grow from its present level of 3% to 9% by 2024.

Redseer Consulting’s analysis states that the BNPL segment is expanding by 65% YoY. By 2025, it is anticipated to increase to $40 billion.