Buy Now Pay Later: The Modern Day Credit Card

'Celebration of Engineering'
3 min readJul 12, 2021


Zeta, the 14th Indian unicorn in 2021, is rethinking payments from core to the edge, algorithms to form factors, applications to solutions. Cipher, one of Zeta’s offerings, was able to successfully handle 1 Million Transactions per Second (1M TPS), illustrating the scalability and elasticity with which banks can handle online transactions. In our endeavor to make payments invisible, we are exploring and evaluating the buy now pay later payment (BNPL) model.

BNPL allows consumers to make purchases without any upfront payments. A modern-day offering from financial institutions, BNPL offers consumers small loans to buy the products or services they want. These loans are typically interest-free as long as they are paid back within the specified time frame.

The buy now pay later concept has existed for quite some time

Key features of BNPL are:

  • Easy and instant credit to people in the 18–40 age group with little to no credit history.
  • Offer interest-free EMIs to the consumers for online or offline purchases and includes school fees, college fees, and medical bills.

BNPL vs Traditional Credit Cards

In today’s world where customers are spoilt for choice and want to be rewarded for making purchases, taking more than a few minutes to onboard a customer and adding extra charges and hidden fees to their payments is a turnoff. Financial institutions also want to capitalize on the trend of instant buying by offering a quick checkout experience where first-time customers do not have to enter details such as card number, CVV, and OTP to make a purchase.

BNPL has grown in popularity with customers and financial institutions because of its various benefits over traditional credit cards.

BNPL accounts can be created instantly within minutes making it the more convenient option for first-time users. Credit cards traditionally could take up to a week to be approved and then there is the time it takes for it to be shipped to the customer. The customer then has to activate it before they can use it.

Unlike traditional credit cards, BNPL charges very little in terms of registration fees, annual charges, processing charges, convenience fees, etc. making it more appealing to customers.

This is not to say BNPL does not charge customers anything extra. In the BNPL model, fees are mostly charged in the form of interest for the borrowed amount and late fees for missed payments. However, most financial institutions offer 0% EMI on BNPL payments, making it even more popular. This has helped rapidly grow the BNPL customer base.

Credit Cards: A thing of the past?

The BNPL industry has grown both globally and in India over the last few years. The 2020 pandemic has only increased its popularity.

In India, the payment option has grown in popularity in tier 2 and tier 3 cities where consumers do not have easy access to credit cards or cannot get easy short-term, low-interest loans.

BNPL has numerous advantages over traditional credit cards. Traditional credit cards still have a place, especially for corporate applications, but the benefits and convenience BNPL offers are sure to see it continue to grow in popularity over the next few years.

Up Next…

In our next blogs (BNPL: The Real Deal or Just Hype, How Does BNPL Work) , we will discuss the global and Indian BNPL market and go into detail about how the BNPL model works.

Phani Marupaka, Hemchander Gunashekar