They are tempting and often result in impulsive purchases beyond budgets. Experts say BNPL and buy now travel later options are double-edged swords that can impact credit score and lead people into a debt trap
For Shreya Sharma, 20, a college student in Mumbai, being able to make online purchases without paying that moment has been an interesting leverage. “Many a time, especially by the end of a month, I’d run out of liquid money… it is then that I bank on platforms like LazyPay and Simpl the most,” says Sharma, naming two of the widely-used buy now pay later (BNPL) platforms in India.
When the first few times Sharma chose the BNPL feature—offered by most online B2C aggregators today—she was able to repay in time. The confidence of purchasing first and paying later made Sharma opt for BNPL services for almost every alternative online transactions. “Initially I had a smooth experience because I used to pay back on time, which increased the limit of my spending offered by LazyPay, my most-actively-used platform. My credit limit went from 1,500 to 10,000,” she says, adding that she considered this equivalent to earning. “When my credit limit increased, it felt like I was being rewarded for paying back on time.”