Digitalisation and (BNPL)
The word digitalization has become a part and parcel of our lives. From reading newspapers to reading news articles on screen, from walking to the grocery store to ordering from Big Basket, digitalization has become our constant. It has transformed our lives by making them hassle-free and swift. Gone are the days when purchasing a ticket required standing in a long queue, now MakeMy trip is just at our fingertips.
But what exactly is digitalization? Google defines it as the process of converting information into digital format. However, more than just conversion, it brings with it the advantages of tasks being smoother, integrated, accurate, and effortless.
The increasing penetration of mobile phones and the internet has further accelerated the revolution of digitalization.
Every industry has transformed with the advancement of technology. Traditional marketing has been replaced with digital marketing by leveraging social media platforms, and digital payments have gained an edge over cash transactions with the introduction of UPI. With so many digital innovations, the 21st century is now called the digital era.
In this digital era, one such thing has been a huge attraction. It is the BNPL – Buy Now Pay Later. As interesting as it sounds, this is expected to grow at a whopping CAGR of ~54% in the coming 5 years! BNPL is a financial tool that helps the customer to purchase without worrying about making the payment at present. It helps to spread the payment over a particular time. With the Covid-19 pandemic, digital payments gained huge momentum which brought BNPL as a new adoption. Unlike traditional credit cards, BNPL provides credit at a lower interest rate with no late fees and higher limits. In addition to it, credit cards require a good credit history but this is not the criteria for BNPL cards. This feature enhances the consumer experience which has been a major driver behind young generations being a huge target audience. With the increasing technological advancement, digital payments are going to boom.
Digitalization brings its pros and cons. We use it judiciously and make the most of it.