BNPL but ... Walk Don't Run

Abstract

Half a century back, when TIME Magazine launched a campaign to rename the Air Force One in response to President Nixon’s visit to China, one of the special mention entries was 'Go Mao Pay Later.' Unlike India, deferred payments were very much a part of the lifestyle in the U.S., where Singer Sewing Machines popularized the installment plan in the 1890s. With globalization and advanced technology, a staggered payments product called 'Buy Now, Pay Later’ (BNPL) came to focus from the early 2010s. It spread in developed and emerging economies, growing in the pandemic era, and India has not been able to buck this trend. In many ways, BNPL is old wine in a new bottle and is popular with younger consumers. An unsecured retail credit product, lenders find it attractive – at the portfolio level, higher margins and spread-out risks make it more profitable. "Alongside the step-change in the use of these products, there has been a rise in concerns about whether BNPL is giving rise to consumer detriment." (HM Treasury 2021, 2). These have become more pronounced after COVID, leading to interventions from consumer advocates and regulators