Digital payments are surging in informal BNPL; Under Rs 200 payments lead the surge
Prior to 2019, the biggest pain in Nitesh Bansal’s life was getting customers to pay their dues. Bansal runs a Kirana cum mobile recharge store at Surat in Gujarat. Customers would keep on buying things at his store over and above an existing credit line, inflating the dues. “ The typical excuses would be- “Forgot cash at home”, “Settle the current bill, will pay the dues later” , “Don’t have change” etc.
In June 2019, Bansal latched on to one of the UPI platforms and since then things have changed. Digital payments have made his life a lot easier, by making credit settlements fuss-free. His customers now scan the QR code or pay him via Paytm. That doesn’t mean he has gone completely digital; 60% of the payments at his store still happen in cash- a reality that has also been reflected in OkCredit’s data
UPI and within that QR codes have been the heroes of this digital revolution. Be it the neighbourhood vegetable vendor or the street food hawker, it isn’t uncommon to find QR codes pasted on their shops and carts. The sheer convenience of scanning a code rather than looking for change or navigating through multiple apps makes QR codes a clear favourite among small and micro businesses.
In fact, 90% of online payments happening on OkCredit take place through UPI, giving it a significant lead over all other forms of payments.
While convenience is the primary reason, it has also been seen that shops that accept digital payments have a better control on cashflows than those who don’t. Three shops away from Bansal’s store, Ajay Sirohi’s “Beena recharge point” suffers regularly because of non-paying customers. Despite several customers requesting him to add digital payments at the store, Sirohi hasn’t done it for fear of cyber frauds. Payments are always an issue at his store, forcing him to resort to borrowing from his friends.
Interestingly, for shops accepting digital payments, smaller denomination transactions are mostly happen through UPI. More precisely, OkCredit’s data states that under Rs 200 transactions are happening through UPI. Small purchases such as cigarettes, confectionery etc are most likely being paid through one among the several UPI options available today.
The good part is UPI’s share has surged in every category- be it Rs 1000- 5000 or slightly higher purchases such as Rs 5000- 20,000. With increasing adoption, digital payments will be a critical factor for success in the informal BNPL.
