The Rise of BNPL in India: Credit Innovation or Consumer Risk?

Abstract

Buy Now, Pay Later (BNPL) has emerged as one of the most consequential financial innovations in India's post-pandemic digital economy, promising credit access to a population historically excluded from the formal credit system while concurrently drawing policy concerns over consumer debt risk, opaque pricing, and systemic instability. This paper presents an exploratory mixed-methods study examining the financial behaviour, motivations, barriers, comprehension levels, and regulatory attitudes of Indian BNPL users and non-users. Primary data were collected from 107 respondents via a structured Google Forms survey, with 50 yielding complete, analytically valid responses. The sample spans four age cohorts (18–24, 25–34, 35–44, and 45 and above), five geographic location types from rural to metro urban, and a range of occupational profiles, including students, salaried professionals, freelancers, and business owners. Key findings reveal that 56% of respondents had used BNPL, with the 25–34 cohort recording the highest adoption rate (77%). A striking 57% of active users employed two or more platforms simultaneously, a multi-platform debt stacking pattern consistent with identified consumer risk vectors in the international literature. Financial comprehension was critically low: 68% of active users stated they would not read the fine print of a BNPL agreement, and 47% of the youngest cohort (18–24) reported understanding BNPL terms not at all, despite being among the most active adopters. Mean user satisfaction was 3.57 out of 5. Motivations for adoption were led by instant credit access and rewards optimisation, while non-adoption was driven by fear of debt and concerns about hidden charges. Sixty-two per cent of all respondents supported RBI regulation of BNPL. The findings suggest that BNPL in India occupies a structurally ambiguous position: it is simultaneously an instrument of genuine financial inclusion and a vehicle of behavioural risk, and the RBI's disclosure-based regulatory framework may be insufficient to protect a consumer base that demonstrably does not engage with disclosed information. The study contributes original empirical findings to a field dominated by market projections and legal commentary, and generates hypotheses for subsequent confirmatory research at scale.