LazyPay is going beyond its digital buy now pay later (BNPL) solutions and personal loans to offer Visa cards to customers as the PayU Finance-owned company joins other BNPL players in targeting customers usually not eligible for credit cards.
The LazyCard which is being launched in partnership with SBM Bank India will be linked to the customer’s pre-approved credit line.
With this offering, LazyPay joins the likes of Slice, Uni, Dhani which offer pay-later cards to customers, most of which have the option of dividing bills or purchases in three parts. But this product will differ from competitors in the repayment cycle.
Speaking to Moneycontrol, Prashanth Ranganathan, chief executive of PayU Finance, said, “This is an extension of our BNPL offering. Initially, we will start with a 15-day repayment cycle which is in line with our BNPL. But we will increase that to a 30-day cycle soon.”
For the 30-day period, customers will not be charged any interest. However, customers can choose to pay later in multiple installments with an added interest fee.
LazyPay is looking at this card as more of an instrument that will allow its customers to use credit across more merchants than just the ones that the company has tie-ups with.
The PayU Finance-owned company said that it has a pre-approved customer base of 62 million for the card and has a credit limit of up to Rs 5 lakh.
While the endgame is credit, why is this not called a credit card? For one, PayU Finance is a non-banking financial company and NBFCs are not allowed to issue credit cards. Second, the features of this card differ from a credit card, according to Ranganathan.
“There are a few subtle differences. This is basically like using a piece of plastic but attaching a credit line to it. Plus, it is different from a credit card in terms of who is eligible for the card. Our interest rates are also lower than that of credit cards,” he explained.
PayU Finance said that the card comes with transactional benefits and rewards-earning potential such as welcome rewards, retention rewards and Visa Platinum Rewards in the form of cashbacks in the range of one to five percent.
Over the past two years, Indian customers have resorted to using the option to pay later in instalments for many small-ticket purchases.
The company currently has three million active users, and is expecting to reach the pre-approved and underwritten user base of 62 million. Over the next year, it is aiming to disburse over 10 lakh cards.
“Of the 10 lakh, we are hoping that 60 percent will be new users from the pre-approved pool. Over the next three years, we are looking at disbursing 100 lakh cards,” Ranganathan said.
For context, fintech Slice is disbursing over two lakh cards per month currently. Leading banks like HDFC Bank and ICICI Bank issue anywhere between 2,00,000 and 3,00,000 credit cards per month.
In December 2021, PayU Finance had announced the launch of LazyPay EMI for credit up to Rs 1 lakh and repayment tenure of anywhere between three to 12 months.
LazyPay is part of India’s fast-growing BNPL and EMI segment which is led by Bajaj Finance, followed by the huge number of fintechs that have seen immense growth since the beginning of the pandemic. The company has over 38,000 merchants and has disbursed more than $300 million in consumer credit.
According to a Bernstein report, India’s BNPL market is $15 billion and likely to grow to $100 billion by 2025.
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