By 2026, buy now, pay later will contribute 14% of e-commerce transactions

According to Benori Knowledge research , BNPL has great potential in the payment ecosystem , especially in the e-commerce sector . By 2026, BNPL will account for 14% of total e-commerce transactions , which is five times the 3 % in 2021 .

Among them, India may become the world's largest BNPL market, which is expected to grow 10 times in the next five years , from the initial stage of US$3.5-4 billion in 2021 to US$35-40 billion in 2026 .

India has a large youth population base, and their preference for online shopping and payment methods has led to exponential growth in local e-commerce . At the same time, the transparency of costs and benefits and a good payment experience have also promoted the popularity of BNPL in the local market .

In addition , the penetration rate of credit cards in the Indian market is low, at only 5%, which is insufficient to meet the credit needs of local consumers. India currently has about 22-25 million BNPL users, and it is expected to reach 90-100 million by 2026 .

Benori found that people’s preference for BNPL is very clear after surveying consumers . 90 % of respondents said they prefer to shop in offline and online stores that offer BNPL checkout methods , and 75% of respondents said they have used BNPL when shopping on websites and apps .

The survey shows that consumers mostly choose BNPL payment methods to purchase electronic products ( 71%), fashion and lifestyle accessories (67%) and daily necessities ( 57%).

Consumer preference for BNPL is driven by its low or no interest rates, followed by the flexibility and convenience of BNPL payment methods , which are very attractive to consumers who do not qualify for credit cards .

BNPL is narrowing the gap with credit card users . Nearly half of the respondents said they use both BNPL and credit card payments ; 45% of the respondents said that even if they have a credit card, they prefer BNPL payment.

Although BNPL is recognized by consumers of all ages , 60% of those who are more inclined to adopt BNPL belong to Generation Z and Millennials. This to some extent indicates that BNPL will become a common payment method in the future .

However , as an alternative payment method, BNPL increases consumers' spending power while also leading to overconsumption.

90 % of respondents said they spent more than expected because of BNPL; 40% said BNPL caused their monthly spending to increase by 30% , and 33 % mentioned the increase was as high as 50% .

This phenomenon is common in both second-tier and third-tier cities, and on average, women spend more money than men when using BNPL.

Benori CEO Ashish Gupta said that while the epidemic has driven the growth of online shopping , it has also brought about inflation and a reduction in disposable income . These two factors have jointly promoted the development of BNPL in the Indian market . Although BNPL currently accounts for only a small part of India's e-commerce spending, it has a lot of room for development.

Cross-border e-commerce market

Buy now, pay later