The combination of Flipkart and Amazon Pay Later has brought a big change in the financial behaviour of the people of India. Digital payments and Buy Now Pay Later (BNPL) services have changed the way consumers approach financial transactions. It has reshaped the credit landscape in India after Flipkart and Amazon came up with PayLater services. It's not only a big change in shopping, but it's also affecting how financial institutions, fintech companies and traditional credit providers operate. Read more about Flipkart and Amazon's PayLater services and their implications, potential risks, and comparison with traditional credit offerings.

What is Flipkart and Amazon PayLater?

Flipkart PayLater and Amazon PayLater are forms of BNPL services that provide an instant credit that can be used at the time of checkout when purchasing products from their respective websites. With this offer, you can buy the products immediately, but it will be enough to pay for it in 15 - 30 days. If the amount is large, it can also be converted into equated monthly instalments (EMI).

a) Flipkart PayPal

Flipkart PayLater is available in two ways:

Next Month Pay Later: Customers will be able to consolidate their shopping amount and pay the entire bill without interest by the 10th of the next month.

EMI option: If the amount is high, customers can convert the bills into EMI with a repayment period of 3 to 12 months.

Main features:

• Credit limit up to ₹1 lakh depending on eligibility.
• Interest-free repayment of the monthly bill if paid within the stipulated time.
• Minimum paperwork with verification linked to PAN, Aadhaar and CIBIL score

b) Amazon PayPal

Amazon PayLater also offers two similar options:

Monthly bill settlement: A single bill that combines all purchases made within a month.

EMI Conversion: Higher amount can be converted into EMI for repayment over a longer period of time.

Main features:

• Depending on the creditworthiness, the credit limit ranges from ₹10,000 to ₹60,000.
• Instant on-boarding process with minimal documentation.
• The integration with Amazon Pay improves the overall digital wallet experience.

Change in consumer behaviour

The convenience and accessibility of pellet services has brought a major change in the consumer behaviour in India. Below are some of the notable changes:

Potential for increased costs: By making credit immediately available, these services enable users to shop for higher amounts without having to worry about prepayments.

Shift to digital credit: Due to its easy and instant nature, customers, especially the new generation, are increasingly preferring digital credit options over traditional credit cards.

Impulse shopping: The option to defer payments is associated with increased impulse purchases, especially during festive sales and limited-time deals.

A change in the credit landscape

Flipkart and Amazon PayLater services have not only influenced consumer behaviour, but have also transformed the financial services ecosystem in India:

a) Increased access to credit.
These services provide access to credit to a large segment of the population, including individuals who do not qualify for traditional bank loans or credit cards due to strict eligibility criteria. Because onboarding is simplified with minimal documentation, PayLater services appeal to first-time credit users.

competition with traditional credit models.
Paylater services provide great competition to traditional credit tools such as personal loans and credit cards by offering more flexibility, lower interest rates, and faster processing. This has prompted banks and NBFCs (non-banking financial companies) to restructure their product offerings.

c) Encouraging Fintech collaborations
Flipkart and Amazon have partnered with fintech companies and NBFCs to offer these PayLater services. Technology-based e-commerce platforms are developing a digital credit ecosystem that works in partnership with financial institutions.

Potential risks

Although PayLater services offer a number of benefits, some risks and drawbacks remain:

(a) The tendency to borrow money
With easy access to credit, consumers are more likely to borrow excessively. This can cause financial strain on individuals and make recovery difficult. This is a matter of concern in a country like India where the level of financial literacy is relatively low.

(a) The impact of credit score
Failure to repay PayLater dues on time can have a negative impact on your credit score. Many consumers may not be fully aware of the long-term consequences of late or unpaid payments.

(c) Regulatory oversight.
As BNPL services evolve, regulatory authorities such as the Reserve Bank of India (RBI) closely monitor their activities. There may be restrictions in the future such as increasing transparency, limiting interest rates, or mandating explicit disclosure of terms and conditions.

There's no denying that Flipkart and Amazon PayLater are transforming the credit landscape by making short-term loans more accessible, flexible and convenient. By simplifying the lending process and integrating it seamlessly into e-commerce transactions, these services provide new opportunities for consumers and businesses.

However, as with any financial instrument, it is important to use it responsibly. Consumers need to pay attention to repayment and understand the long-term implications of the loan. In this evolving credit ecosystem, Flipkart and Amazon PayLater stand out as great entrepreneurs, paving the way for a more inclusive and digital economic future in India.