Is India’s BNPL 2.0 set to disrupt B2B? – TechCrunch

Both as a word And as a financial product, “buy now, pay later” has become mainstream over the last few years. BNPL has evolved to take on a variety of forms today, from small ticket offers by FinTech on the consumer checkout platform and Marketplace to Amazon Pay Later (which they are now expanding to outdoor use) as well as closed-loop products offered in the market. You can also look at some of the types offered by companies that want to increase the reach of consumption and consumer credit.

Globally, BNPL has seen the highest growth in the consumer segment and has managed retail consumption and lending over the past few years. The Consumer BNPL offer is a good credit card option, especially for those who do not have a credit history and cannot get credit from banks. That said, BNPL is gaining a certain vertical traction of products – aimed at small and medium enterprises (SMEs). This new vertical is known as “SME BNPL”.

BNPL can be especially useful when flow-based underwriting or transaction-based underwriting is used to lend to small businesses.

B2B commerce is advancing online in India

India has seen tremendous growth in e-commerce in the last decade. Skyrocketing smartphones and internet penetration led to rapid growth in e-commerce in big cities and small towns. Consumer lending also stimulates credit-based access to flyline and online stores taken in parallel as credit cards and digital lending.

However, the large B2B supply chain that enables the growing retail market was plagued by bottlenecks and inefficiencies as it had a plethora of intermediaries and order became a major problem. A number of tech players responded by aligning the previously awkward B2B commerce market at various touch points, introducing convenience, pricing and easy product access access through tech-enabled logistics and modern supply chains.

Online B2B and B2C entry in India in 2019

Image Credits: Redseer

India’s B2B e-commerce space has grown rapidly since 2020. Small businesses have moved to smartphone applications using paper to run a significant portion of their day-to-day business, leading to widespread disruption of how businesses operate today. The Covid-19 epidemic also forced small businesses, which previously used physical means to purchase goods and services, to try new and online models to manage their affairs.

Graphs showing the growth of India's B2B retail market

Image Credits: Redseer

Moreover, the widespread promotion of instant payment system in the form of Unified Payments Interface (UPI) by the Government of India has changed how people send money to each other or pay merchants for their goods and services. The next step in solving the digital B2B puzzle is to deposit credit within each transaction and invoice.

Investment in Bline B2B in India 2016-19

Image Credits: Redseer

If we compare Bline B2B transactions with the fly world, there is only one missing link: the terms offered to small businesses by their supplier / distributor or seller. Businesses, unlike consumers, must eventually buy goods and services in order to trade them, or to add value and sell to customers or others below the value chain. This process is not immediate and a specific time cycle is attached.

Long sales cycles mean that many small businesses require credit payment terms when purchasing inventory. As B2B commerce grows and grows through digital medium, BNPL products that meet the needs of SMEs can support their growth and ease the burden on their cash flow.

How is Customer BNPL different from SME BNPL?

The SME BNPL product is a purchasing credit product for small businesses dealing with suppliers, distributors, aggregator platforms or the B2B marketplace.

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