Pine Labs sees huge demand for its buy-now-pay-later service in hinterlands

The fintech unicorn expects to process BNPL transactions worth Rs 5,000 crore this month as an increasing number of customers in small towns are buying products on EMI this festive season

Fintech unicorn Pine Labs is scaling up its efforts to expand in India's Tier-2 and 3 towns, and hinterlands. The firm is witnessing a huge demand for its Buy Now Pay Later (BNPL) services among the offline merchant community during this festive season.

Pine Labs expects to process BNPL transactions worth Rs 5,000 crore this month as an increasing number of customers in small towns are buying products from physical stores using EMI (equated monthly installment).

These include products such as smartphones, wearables, large appliances, smart televisions, and washing machines. Other categories in which it is seeing huge demand include fashion, apparel, and lifestyle products.

“We are expecting to cross Rs 5,000 crore in (transaction value) for BNPL for the month of October. This is a 100 per cent growth compared to an average month,” said Mayur Mulani, Business Leader-Pay Later, Pine Labs, in an interview. “This is also the first time people are stepping out after two years to the stores to shop for the festive season.”

Overall Pine Labs, which is valued at $5.05 billion, competes with players such as Razorpay, Paytm, and PayU. It is looking at working and partnering with 100,000 stores for BNPL services this month. It has partnerships with brands such as Samsung, Sony, Whirlpool, Xiaomi, and Oppo.

Mulani said the firm is enabling BNPL along with merchants even to customers buying a Rs 10,000 pr Rs 20,000 phone. “That has been a big lever for us and we see a significant uptake,” said Mulani.

The firm said its merchants are in an advantageous position as it offers a growing network of leading banks and brands on its Pay Later platform. The company has built a robust and secure tech stack on its Android-powered PoS (point-of-sale) terminals. These ensure paperless Pay Later debit and credit card EMI transactions are validated and processed within seconds.

Pine Labs also recently entered the wearables segment in the consumer electronics category. Shoppers in India can purchase wearable devices of select brands on a BNPL arrangement using Pine Labs’ PoS terminals.

“We are going to tier-3, tier-4, and tier-5 cities to work with merchant stores and change their behavior about how EMI can increase their sales,” said Mulani. “The brick and mortar stores were struggling a couple of years back compared to the ease of transactions performed by the online retail players. We really worked hard and got out (BNPL) products that give instant gratification to the customers. Ease of transaction is also the key for pushing affordability.”

Pine Labs is now enabling BNPL across a network of 15 major credit card issuers with a potential customer base of over 40 million. The company also introduced first-of-its-kind EMI on debit cards and from NBFCs with a combined eligible base of 60 million

India’s BNPL market would grow to $45-50 billion by 2026, up from $3-3.5 billion today, according to experts.  They said the number of BNPL users in the country might increase to 80-100 million by then, up from 10-15 million now.

Covid-19 led to the rise of digital lending by NBFCs and the proliferation of innovative credit products. About $25 billion to $30 billion credit was disbursed to 15 million buy-now-pay-later users in FY21, as BNPL emerged as a preferred credit offering in the wake of Covid-19, according to a report by consulting firm Bain & Company.

It said short-term, small-ticket consumer loan products, which offer convenience and a better customer experience, grew rapidly as a preferred mode of consumption financing. Additionally, equated monthly installment (EMI)-based CC propositions are gaining traction in the small-ticket-size segments. “From a fintech perspective, we saw the emergence and scale-up of convenience Buy Now Pay Later (BNPL) such as Simpl and LazyPay, affordability BNPL (e.g., ZestMoney), and card-based lending products,” said the Bain & Company report.