Consumer Trends In The Digital Payments' Ecosystem With Reference To The BNPL Model?

Headquartered in Bangalore, Simpl has created a unique Pay-Later platform that empowers e-commerce merchants to offer their consumers 1-click checkout, a line of credit at POS and full buyer protection. Founded in 2015, the company has so far raised $16.9 million through various rounds of funding.

In recent years, there has been a marked shift from cash to digital payments. Consumers in India are making the transition from cash payments to other forms such as cards, mobile wallets, and Buy Now Pay Later (BNPL). These digital payment solutions have made life much easier for consumers, as they can make a payment at the click of a button. In addition to this, it has become much easier for them to keep track of their expenses using mobile apps.

The ongoing COVID-19 crisis has increased the importance of the digital payments’ ecosystem even further. Consumers are happy to use contactless payment modes in order to protect their health. This article looks at the latest trends in the digital payments’ ecosystem. In addition, it also discusses the evolution of payments with respect to BNPL.

Key Trends in the Digital Payments’ Ecosystem in India
The digital payments’ ecosystem in India continues to evolve at a rapid pace. Consumers are making the switch to payment modes which they deem to be quick and convenient. In fact, the entire online shopping behaviour of Indian consumers is witnessing a drastic shift. According to estimates, Indians are planning to move towards online channels at a rapid pace.

According to estimates, the demand for hyperlocal delivery of essentials has grown by as much as three to five times during the COVID crisis

As per a survey conducted by Capgemini in mid-2020, just 46% of respondents are expecting to shop via offline stores in the next six to nine months. This figure pales in comparison to the 59% of people who were shopping offline before the COVID-19 pandemic began. This result indicates that Indians are more open to purchasing goods online in the wake of the pandemic.

At present, two major trends are dominating the digital payments ecosystem in India. Firstly, hyperlocal merchants are witnessing a sharp rise in transactions. Secondly, Indians are also increasing their spending on food and other essential items. The rising popularity of BNPL has a major role to play in both these emerging trends. This mode of payment provides a great deal of convenience to customers who are looking to shop from different merchants.

Hyperlocal Merchants Recording an Increase in Transactions
Leading BNPL providers are recording a sharp increase in online transactions. In particular, Indian consumers are trying out online hyperlocal merchants in order to fulfil their needs. For instance, Simpl has recorded a 30-40% increase in the number of new offline to online users that are trying services from online hyperlocal merchants compared to the pre-COVID era. This increase clearly indicates that hyperlocal merchants are now growing in significance and vying for a larger share of the market in India.

This trend is also likely to continue even after the COVID crisis is behind us. The key reason behind this is that consumer behaviour is being impacted permanently by the crisis. Consumers are becoming accustomed to newer ways of payment, newer places to shop online, as well as trying out new items. Indian consumers are becoming addicted to hyperlocal deliveries, which bodes well for the digital payments industry in the country.

Increased Spending on Food and Essential Items
Another key trend that is having a major impact on the digital payments’ ecosystem is the fact that Indian consumers are now spending a lot more on food and essential items. According to estimates, the demand for hyperlocal delivery of essentials has grown by as much as three to five times during the COVID crisis. Leading brands in the country have started to explore these opportunities by launching their hyperlocal delivery services.

The increased spending on food and essential items is also being driven by the convenience of payment modes such as BNPL. Using this method, individuals can order food, groceries, medicines, and other essentials at the click of a button. Further, there is no need to make payments each time you are making a purchase. Instead, one can make a single payment at the end of the month.

Millennials are using BNPL to purchase essential goods so that they do not end up in a debt trap. Furthermore, this method also provides them with peace of mind and a great degree of transparency. Thus, it is likely that the BNPL mode of payment will gain further traction in the near future, as Indian consumers become familiar with the concept and its immense benefits.

To sum up, it is evident that the digital payments’ ecosystem in India is continuing to evolve. Indian consumers are becoming accustomed to purchasing goods and services from hyperlocal merchants using digital payment methods. In addition to this, consumers are also increasing their spending on food and essentials while choosing innovative modes of payment, such as BNPL. Overall, the prospects for the digital payments space appear to be excellent, as the shift in consumer behaviour gathers pace.