Buy now pay later (BNPL) has been gaining prominence in India with increasing number of payment and fintech companies vying to get a pie of this fast-growing market. Swiggy’s announcement comes within few days of its rival Zomato’s plans to offer BNPL services. Both the companies are set to benefit by venturing into fast growing BNPL space, says GlobalData, a leading data and analytics company.
While the concept of BNPL is currently more prominent in categories like travel and accommodation, electronics, clothing and footwear, it is set to penetrate food delivery with major players such as Swiggy and Zomato venturing into this space.
Swiggy has a network of around 128,000 restaurants across 500 Indian towns and cities with around 20 million monthly active users while Zomato has a network of nearly 390,000 restaurants and 32 million monthly active users. The launch of BNPL service can help both companies further penetrate the market by offering flexible payment mode to their customers.
Kartik Challa, Senior Payments Analyst at GlobalData, says: “Online food delivery market is in growth phase in India with consumers, largely young and working population, opting for convenience of ordering food online. The COVID-19 pandemic changed the buying behavior of consumers with larger customer segments now switching from offline to online channel to avoid exposure.”
Despite reopening of restaurants, growing number of consumers continue to order food online.
This reflects in GlobalData’s 2021 Financial Services Consumer Survey* conducted during Q1 and Q2 2021, where 55% of respondents in India stated that they used BNPL service for online payments in the past six months. The recent outbreak of Omicron variant will further drive online food delivery businesses.
Challa concludes: “Although Zomato and Swiggy each have strengths and weaknesses that make them stand out from each other, it remains to be seen whose BNPL service proposition becomes a more successful payment solution in the food delivery space. BNPL presents huge business opportunity and has the potential to disrupt the consumer payments space in India, and both companies can immensely benefit from this by playing to their strengths and increase transaction value.”