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What is BNPL?

What is BNPL?

  • By Saral Credit
  • September 20, 2022

Online purchases have become a common trend nowadays. People have got the option to own any online product without paying hard cash. Instead, they buy the products with different credit facilities like a personal loan or credit card.

However, the use of credit cards for online shopping has been overshadowed by a new option, i.e., BNPL Loan.

What is a BNPL Loan?

BNPL is also known as Buy Now Pay Later. It is a payment mode that lets you purchase any item online without paying a single penny from your pocket. Multiple BNPL loan providers pay the purchase amount on your behalf.

Usually, you sign up on the online shopping website and purchase with the approval of the online proposal of buy now and pay later. However, you are required to repay the purchase amount within the stipulated timeframe. If you pay the purchase amount to the lenders within a given timeframe, no interest rate is imposed, which makes it a revolutionary lending option compared to personal loans.

For the initial few months, the BNPL loan providers even offer zero-cost EMI. Moreover, you can also convert your full purchase into Easy Monthly Installments (EMIs). However, if you fail to pay the EMI on time, you will be liable for a penalty on the purchase amount. Interestingly, negligence towards the BNPL repayments will cause strict harm to your credit score.

With this initial information, you are partially familiar with the BNPL purchases. Let's check out how the BNPL works.

Working of BNPL Purchases:

The BNPL is somewhat similar to buying via credit cards. However, the operational model of BNPL service providers differs from that of credit cards. The entire process of a BNPL loan works as below.

  • Purchase any item from the participating retailer.
  • Choose the "Buy Now Pay Later" option.
  • Pay small upfront and start using the item without paying the full amount.
  • Pay the remaining via interest-free EMIs.

You should note that payment for BNPL purchases can be made via bank transfer, cheque, or debit card.

Why Should You Opt for BNPL Loans?

Most people would ask about the benefits of BNPL purchases when credit cards offer similar facilities. Below are some advantages of considering BNPL that you must consider:

Available for a Wide Range of Customers: Buy Now Pay Later is an excellent option for customers to make purchases without paying full upfront. It is highly beneficial for buyers who are waiting for their paychecks but looking forward to making a purchase.

No Plastic Cash Required: Customers don't require plastic money to make purchases. Most Gen-Z doesn't have a scope of getting a credit card. Hence, they can easily choose the BNPL option to make a purchase. You can opt for a BNPL purchase after accepting the terms and conditions of the lender.

No-Cost EMI Option: The most interesting advantage of considering BNPL is its no-cost EMI option. No-cost EMI option is available on credit cards seasonally or product specific. It means you can't take advantage of zero-cost EMI on any product you want. However, BNPL offers you no-cost EMI on all products.

Safe and Secure Transactions: The safety of transactions matters when making a big purchase. BNPL ensures all your transactions remain 100% secured and protected from online thefts and hacks.

Who Qualifies for the BNPL Loan?

With these benefits of the Buy Now Pay Later, you have now understood why the BNPL option is growing. Now, it's crucial to know whether you can qualify for this loan. Below are the standard eligibility criteria to get Buy Now Pay Later facility.

  • You must be a resident of India.
  • You must reside in a major tier 1 or tier 2 city.
  • You must be aged above 18 years. In some cases, the maximum age of eligibility can be up to 55 years.
  • You must be a salaried individual.
  • You must have a bank account and KYC documents.

Difference Between Personal Loan and BNPL

Before choosing between a personal loan and BNPL, you must know what differentiates them.

Personal Loan


Offers a maximum loan of Rs.25 lakh

Offers a maximum loan of Rs.1 lakh

It includes secured and unsecured loans

It is a 100% unsecured loan

Comes with interest on principal amount

Comes with zero-cost EMI

There aren’t any restrictions on money usage

Usage of BNPL is limited to online purchases

Loan available for up to 60 months

Loan available for up to 90 days


Difference Between Credit Cards and BNPL

Like personal loans, credit cards are another option people use instead of BNPL. Below is a head-to-head comparison between a credit card and a BNPL facility.

Credit cards


Credit cards come with hidden charges

BNPL has a 100% transparent operational model

You require a good credit history to get a credit card

Good credit history isn’t an essential factory to use BNPL facility

Credit cards have a wide scope globally

Currently, BNPL facilities are available with a few e-retailers and fintech

Comes with standard zero-cost EMI options

Comes with interest-free EMI for up to 48 months

Approval for credit cards is a big tough

Comes with easy approval process

You get the option to pay minimum due amount

You strictly require paying the EMI

Every purchase offers credit points

BNPL purchases don’t include any additional benefits


What's the Future of Buy Now Pay Later?

With credit cards and personal loans already in the market, it's challenging to predict how BNPL facilities will serve customers. Interestingly, the BNPL has a glowing future ahead as it is attractive to new customers that don't involve plastic money and provides a quick loan disbursal. Above all, zero-cost EMI on all products makes it a fantastic option to choose.

However, lending money to everyone makes it tough for the lenders as they don't have collateral. It's essential to ensure the borrower has the potential to repay the loan amount in the stipulated timeframe.

BNPL players in the Indian Market

Today, numerous fintech companies have introduced their BNPL facility for needy customers. Below are the top rankers in our list.


  • Founded in: 2015
  • Time Provided to Clear Dues: 15 days
  • Late payment or payment delay attract penalties


  • Founded in: 2016
  • Technology Used: Mobile technology, Digital Banking, and Artificial Intelligence (AI)
  • Interest-free Instalment options: Available for tenures of up to 6 months
  • Registered Users: More than 6 million


  • Time Provided to Clear Dues: 15 days
  • Other Facilities: Loan up to INR 100,000
  • Operated by: PayU Finance
  • Active Users: More than 2 million


  • Founded in: 2015
  • Interest-free credit limit: Up to INR20,000
  • Time Provided to Clear Dues: 15 days

Paytm Postpaid

  • Time Provided to Clear Dues: 1 Month
  • *Bills are generated on the 1st of every month and can be paid till the 7th.
  • Interest-free credit limit: Up to INR10,000
  • Convenience fee: 0 to 3% of net monthly spending

OlaMoney Postpaid

  • Time Provided to Clear Dues: 15 days
  • *No hidden charges

Amazon Pay Later

  • Launched in: 2020
  • Time Provided to Clear Dues: 15 days
  • * Can opt for installments with interest within 3 to 12 months
  • Interest-free credit limit: Up to INR20,000

Flipkart Pay Later

  • Time Provided to Clear Dues: 35 days
  • *Customers can pay a minimum due amount, including a convenience fee, before the 10th of the month

Tips to Choose the Right BNPL Facility Provider

You have earned enough knowledge about the top BNPL lenders across the nation. The selection of one from many available options makes it challenging for a newbie. Hence, below listed are some points that will help you choose the right BNPL provider across multiple options.

Online Reputation: Reputation matters when you are selecting the right BNPL lender. A legit BNPL provider will always appreciate 100% transparency. It means you won't encounter hidden charges when selecting their Buy Now Pay Later option.

Online reviews will help you a lot in shortlisting the lenders based on their online reputation.

Region Availability: Make sure the BNPL lender you selected has a physical presence. It will ensure you can reach their office if you encounter any big trouble. However, customer care service can answer most of your queries, yet a physical address gives you a trust uplift when selecting the lender.

Pricing Structure: Read all terms and conditions and check the fee structure included, as it will give you a better understanding of what you are selecting. It's crucial to ensure you are falling prey to fake lenders. Usually, lenders provide you with terms and conditions before the confirmation of your request.

This brings us to the end of this informative article. The future of the BNPL facility is bright. The Buy Now Pay Later is a great option for customers looking for online purchases without worrying about upfront. BNPL let you buy your favorite item online and pay the bill later. The lender will take care of everything.

However, timely repayment is essential as missed payments involve high penalties. So, if you opted for a BNPL option, you must ensure the payment is done within the stipulated timeframe.