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For long, Buy Now Pay Later or BNPL has been a popular model for making purchases with consumers using the easily available option to buy stuff ranging from appliances to gadgets to practically everything.
But now a disruption seems to be happening in the segment and a bunch of start-ups – the most common category of disruptors – are taking the BNPL model head-on by offering a Save Now Buy Later (SNBL) option.
SNBL, as the name suggests, is a combination of saving for a future purchase. The added benefit – and a very important one – is that one gets discounts – ranging from 10 per cent to as much as 20 per cent at times – on the purchase price.
SNBL is a mechanism that has brought saving and spending on the same platform and while historically there have been such schemes available in India for decades, a clutch of start-ups is now using the power of technology and data to make it available to the masses.
Start-ups like Tortoise, Hubble, and Multipl to name a few operate in the SNBL space in India and have been seeing strong traction in terms of the number of users though the overall segment is still in its infancy.
Gurgaon-based Hubble, which was launched in April 2022, currently has tie-ups with merchants like Nykaa, Myntra, Croma and Bluestone and is in the process of collaborating with 20 more brands.
Delhi-based Tortoise is another well-known start-up in the SNBL space and offers a minimum 10 per cent incentive to every user who saves to buy on the platform.
Then, there is Bengaluru-based Multipl, which also operates in the SNBL segment, but has a slightly different business model as it also allows users to invest in curated mutual fund schemes that can generate returns and lower the overall cost of the goal.
Currently, most of the merchant tie-ups are in the categories of travel, gadgets, and appliances though these start-ups in the SNBL space are actively working towards enhancing the bouquet of categories or goals – weddings as a goal has also been gaining prominence.
Also read: Buy Now, Pay Later during festive season: Is this your best option?
Here is how it works.
There is a simple registration process post which the user can choose a merchant (for instance, Apple, MakeMyTrip, Croma, Myntra, Nykaa, etc) through which he or she intends to make the purchase.
Thereafter, the goal amount and duration of deposits have to be selected and one can start from as low as ₹500 as monthly deposits. Say, for instance, one can set aside ₹5,000 every month for 10 months while targeting a purchase of ₹50,000.
Meanwhile, how the incentives are given out can differ from one platform to another. Hubble, for instance, gives a gift card for the cumulative amount – money deposited plus the incentive value – while Tortoise credits the money back to the user’s account and gives a 10 per cent cashback when the invoice is submitted.
Interestingly, if the growth numbers are anything to go by, then the SNBL platforms are indeed creating an impact.
Tortoise has signed up over 1.5 lakh customers on its app since it launched in April 2022 and aims for a gross merchandise value or GMV of $5 billion over the next four years across 4-5 verticals covering travel, electronics, and appliances, home & auto, personal care and luxury.
Hubble, on the other hand, has registered more than 4 lakh app downloads and has been witnessing its revenues jump 50 per cent on a monthly basis.
These start-ups have also seen investments from marquee names from the investing community – Sequoia Capital, Blume Ventures, IIFL Finance, Kunal Shah of Cred, and Sriharsha Majety of Swiggy among others –enter the ring.
Data from Tracxn shows that while Hubble is backed by Sequoia and Snapdeal co-founder Kunal Bahl among others, Bengaluru-based Tortoise has the backing of Vertex Ventures and Better Capital along with Cred’s Kunal Shah. Meanwhile, Multiple has been funded by names like Blume Ventures, IIFL Finance, GrowX Venture Management, and Kotak Securities among others.
Meanwhile, BNPL is inflexible in terms of the repayment schedule and components like interest cost and processing fee make it an expensive approach at times. At times, the interest cost could be as high as 15-20 per cent if the repayment schedule is disturbed.
Not to forget, that there are no real incentives in the form of cashback or savings, and in fact could lead to overspending as well since lenders are more than happy to dole out loans for discretionary spending by consumers.
But, BNPL has its share of advantages as well, especially for those who need to make a purchase instantly but are running low on cash.
Under BNPL, the borrower gets the option of an instant, short-term loan with a deferred repayment tenure, including the option for equated monthly instalments (EMIs) after the end of an interest-free period.
Also read: BNPL vs Credit Cards: What happens when you default on payment
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