Buy Now, Pay Later Shopping – Driving ‘Cashless’ Economy

India is a heavily cash-driven economy as far as payments are concerned. For decades, both buyers and sellers have been used to exchanging cash during purchase. The advent of credit cards and the digital revolution have over time given a new twist to the way financial transactions take place – both have enabled cashless transactions.

While credit cards also allow for offline or in person cashless transactions, digital payment initiatives allow for transferring cash via the internet. With the advent and rampant development of e-commerce in India, the online purchase has become a major trend and is set to grow in the coming times.

However, online purchase involves multiple steps for payments and hence, has opened up to a new concern – transaction failure. Customers using the ‘checkout’ route for purchases on e-commerce platforms face friction in the form of- multiple steps to purchase. This consumes a lot of time and chances of transaction failure are high, which altogether leads to dropouts – something no e-commerce portal wants to witness.

Need for a Frictionless process

Purchase dropouts have become a major concern for e-commerce companies even as they try hard to ensure customer loyalty and increase purchase volumes. This necessitated the need for a frictionless, hassle-free, and a simple transaction process.

Ours is a cash-driven economy, accounting for at least 68 percent. In the US, it is at 9 percent. On the other hand, US has over 48 percent population using credit cards, against just 3 crore credit cards in India. To get people to move away from cash, you need to give them a fitting alternative which will be frictionless.

                    – Aurko Bhattacharya, Co-founder, ePaylater

A few fin-tech start-ups have come up with a unique and innovative concept that focuses on addressing the issues of transaction failure and multiple-stage checkout. The concept of ‘Buy now, pay later’ addresses these concerns and allows for a more hassle less-present process.

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‘Buy now, pay later’ concept stemmed out of a passionate need to –

  1. a) Ease digital transactions so customers find it less stressful to purchase online
  2. b) Provide a credit extension to parties that were short on cash or have an emergency purchase that requires additional cash
  3. c) To drive a cashless transaction that is frictionless and fast

Benefitting E-commerce companies

Driven by innovative technology, ‘Buy now, pay later’ has captured the attention of e-commerce portals in more ways than anticipated. Reports suggest that transactions failures account for at least 30% of the total traffic to the websites, a staggering figure that does not augur well for these portals. E-commerce companies stand to gain a lot through ‘Buy now, pay later’ as it helps curtail the number of transaction failures.

Lower transaction failures mean a higher number of purchase orders leading to incremental revenues, a much-desired objective for e-commerce companies under the current competitive scenario. Another advantage of the concept is that it acts as a strong customer acquisition tool for e-commerce companies who generally shell out vast amounts of acquiring customers through various promotions and offers.

Benefitting the Buyers

Buyers who have been subjected to hassles during payment process can now breathe a sigh of relief as the multiple-stage process is now condensed to a single tap. ‘Buy now, pay later’ also helps buyers save time and complete the purchase process successfully.

Helps overcome Railway Ticket booking hurdles

Another area where this concept helps buyers is in the case of ticket booking, especially, railway ticket booking. There is a big difference in demand vs supply of reserved seats in trains owing to which government under the aegis of IRCTC has introduced the Tatkal (or emergency ticket booking), which allows travelers to get confirmed seats at premium rates. The fact is, Tatkal booking opens and closes within minutes leaving many customers helpless and disappointed. While on one hand, they fail to get a ticket on the other, they end up paying the money by credit/debit card and need to wait for days to get reimbursed.

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One of the providers, ePaylater, has partnered with IRCTC and has provided a relief for customers. The provider helps travelers book Tatkal tickets quicker and in case of travelers end up not getting a confirmed ticket, there is no cash transaction as ePaylater allows for credit.

The pre-defined credit that comes with ‘Buy now, pay later’ is what helps customers avoid the critical issue of paying money without getting a ticket confirmed.

In an economy that is influenced b the digital revolution and is hoping to go cashless, ‘Buy now, pay later’ is definitely pushing boundaries on cashless transactions even as it finds more support and use going forward. E-commerce companies – from large retailers, to food, fashion and ticket booking sites see it as a welcome move and have begun partnering with solution providers. The concept is definitely proving beneficial to all stake holders from buyers, to sellers and solution providers and is well positioned to grow in popularity and acceptance going forward.

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