India Buy Now Pay Later Services Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

India Buy Now Pay Later Services Market Trends and Insights

Rapid UPI-driven instant credit underwriting in Tier II & Tier III cities

The convergence of UPI and pre-sanctioned credit lines lets shoppers in smaller cities access checkout finance within seconds, eliminating paperwork and raising eligibility for “new-to-credit” users. Companies such as HDFC Bank and ICICI Bank now overlay PayLater accounts on standard QR payments, while super.money processed 124.83 million UPI-credit transactions in January 2025 alone^{[1]super.money, “super.money Acquires BharatX to Expand UPI Credit,” super.money}. The outcome is a wider India BNPL market customer base, higher ticket sizes, and stronger merchant acceptance in locations that previously lacked formal credit infrastructure.

Low credit-card penetration fueling alternative credit

With card penetration at only 5% of adults, the Indian BNPL market fills a systemic gap rather than merely offering convenience. Adoption could reach 100 million users by 2026 as consumers opt for instalments that sidestep interest-heavy revolving debt. Seamless UPI routing removes onboarding friction and positions BNPL as the de facto digital credit rail for discretionary as well as essential purchases.

Merchants push to cut COD returns and lift average order value

Cash-on-delivery still dominates rural commerce, creating refund risks and working-capital drag. When merchants embed BNPL through partners like Simpl and Cashfree Payments, cart abandonment falls by 51% and order value rises by 30%, improving gross margins and encouraging wider adoption. This reinforcement loop accelerates transaction growth within the India BNPL market and rewards providers that integrate deeply into checkout flows.

RBI Account Aggregator & India Stack enable real-time data

Consent-based data sharing reduces the historic 7-day approval lag to minutes, expanding underwriting to thin-file customers. The Open Credit Enablement Network standardizes lender–fintech connectivity, lowering acquisition costs and ensuring regulatory visibility. Faster approvals translate into higher conversion, anchoring a sustainable demand curve for the Indian BNPL market^{[2]Reserve Bank of India, “Risk-Weight Framework for Consumer Microfinance,” rbi.org.in}.

RBI curbs on prepaid credit lines tighten operating models

Draft guidelines now treat BNPL balances as formal loans, forcing non-banks to partner with regulated entities, raise capital, and overhaul disclosures^{[3]Reserve Bank of India, “Guidelines on Default Loss Guarantee in Digital Lending,” rbi.org.in}. Compliance outlays climb, eligibility narrows, and some providers pause expansion until revised frameworks stabilize.

Rising short-tenor loan delinquencies impact unit economics

Early repayment stress has widened provisioning gaps after regulators excluded default-loss guarantees from credit-loss buffers. NBFCs sourcing loans from fintechs report profit compression, which could limit loan-book growth unless underwriting models tighten and risk-based pricing improves.

Segment Analysis

By Channel: Physical checkout finance accelerates omnichannel convergence

Point-of-sale BNPL is projected to grow at 24.5% CAGR, reflecting shoppers’ preference for instantaneous QR-code credit at neighborhood stores. In 2024, the online route still held 83.3% of India's BNPL market revenue, but in-store momentum signals deeper integration between digital wallets and physical merchants. UPI-linked credit lines let buyers split payments without submitting new KYC forms, lowering friction and extending reach beyond e-commerce.

The India BNPL market size for in-store purchases is projected to surge as payment processors embed instalment buttons inside existing POS software, allowing merchants to auto-offer tenure options on high-value items. As offline and online boundaries blur, providers focus on uniform user journeys that preserve repayment reminders, loyalty perks, and credit limits across multiple touchpoints. This omnichannel approach limits customer churn and raises lifetime value.

By End-Use Industry: Healthcare financing unlocks untapped demand

Consumer electronics retained 35.1% of the 2024 India BNPL market share, since instalments align with average handset or appliance outlays. Yet, healthcare & wellness, growing at 26.2% CAGR, now pulls BNPL into essential spending where immediate liquidity gaps are critical. Hospitals and clinics integrate instant credit APIs, reducing admissions delays caused by upfront deposit requirements.

India's BNPL market size for healthcare procedures is forecast to multiply as providers package repayment schedules around insurance reimbursement cycles. Momentum in elective surgeries and wellness subscriptions signals durable demand, prompting specialized BNPL start-ups to partner with hospital networks and diagnostic chains. Diversification into healthcare cushions providers from discretionary-spend cycles tied to electronics or fashion.

By Age Group: Generation Z sets adoption tempo

Generation Z held 39.7% of total users in 2024 and registers a 23.6% CAGR, reflecting mobile-first habits and mistrust of revolving credit. This cohort’s threefold higher propensity to choose BNPL supports consistent transaction growth in the Indian BNPL market. Use cases span from online fashion drops to offline gadgets, driven by gamified repayment dashboards.

Millennials follow as heavy-ticket shoppers and prefer BNPL for home upgrades and travel plans. Older cohorts adopt selectively, typically for medical or utility spends where staggered payments ease budget shocks. Providers tailor communication in regional languages, boosting penetration in semi-urban clusters where digital confidence is rising.

Note: Segment shares of all individual segments are available upon report purchase

By Provider: Banks leverage compliance edge to close gap

Fintechs still accounted for 64.8% of India's BNPL market size in 2024, underpinned by agile UX and rapid merchant onboarding. Nevertheless, banks are advancing at 25.3% CAGR by embedding BNPL inside familiar net-banking and debit channels. UPI-linked PayLater products move bank customers from swipe-based to scan-based credit, encouraging cross-selling of deposits and insurance.

Co-lending partnerships dominate; fintechs manage front-end acquisition and analytics, while banks fund balances and absorb regulatory exposure. The India BNPL industry, therefore, evolves toward platform alliances rather than single-stack disruption, creating blended offerings that pair intuitive interfaces with low-cost balance-sheet capital.

Geography Analysis

The Indian BNPL market presents a layered regional profile. Metropolitan cities currently contribute the highest absolute transaction volumes, yet semi-urban centers post faster growth, helped by a 414% rise in credit-card spend from 2019 to 2024 versus 96% in metros. Improved broadband, government identity programs, and aggressive e-commerce expansion encourage merchants in Indore, Coimbatore, and Guwahati to integrate checkout instalments.

Tier II and Tier III cities now house 72% of internet users; vernacular apps streamline onboarding, and family-owned stores begin to prefer QR-code BNPL over ledger credit. The India BNPL market size linked to these cities is forecast to widen as fintechs mine alternative data, such as utility payments, to calibrate risk for first-time borrowers. Aggregator hubs in Jaipur and Lucknow also attract fintech operations talent, distributing service centers beyond Bengaluru and Mumbai.

Rural markets remain nascent yet strategic. Limited card acceptance and seasonal cash flows create demand for micro-instalments aligned with harvest cycles. Banks pilot BNPL products bundled with savings accounts, while NBFCs tap Account Aggregator feeds to vet applicants who previously held no formal credit footprint. As telecom operators extend 4G coverage, rural adoption is set to add incremental volume to the India BNPL market without materially elevating risk due to smaller but more frequent ticket sizes.