Many users of food delivery applications are not aware of the credit implications of using a 'Buy Now Pay Later' option
On Wednesday, a Swiggy user took to Twitter to raise alarm about the food delivery service’s aggressive selling of the ‘Buy Now Pay Later’ (BNPL) option. According to the tweet, Swiggy put up a message on the app user’s payment page to dissuade them from making UPI payment and to use LazyPay’s BNPL option instead.
This has been flagged as a ‘dark pattern’ by the user. A dark pattern refers to unethical user interface designs intended to deceive a user into making a harmful choice. In this case, the user was being led to avail a credit payment option despite other payment methods such as cash, debit card or UPI.
Several other users agreed that this is indeed a dark pattern and even tagged regulatory bodies such as National Payments Corporation of India (NPCI) and Consumer Affairs to look into the matter. The cause of concern here is that naïve users may be led to availing credit in their name without even being aware of it. Some users even mentioned that similar incidents have happened to them in the past and that they had to pay back BNPL ‘loans’ that they were unaware of having availed in the first place.
BNPL schemes have been around in India for a while now and despite their growing popularity among the younger population, the Reserve Bank of India (RBI) is keeping a close eye on them. They act as a point-of-sale installment loan service that allows one to access easy credit without the hassle of getting a credit card.
The increasing penetration of digital payment services in the country and the boom in e-commerce sector has resulted in BNPL schemes presenting itself on our phone screens more frequently. Although BNPL players had to refrain from issuing pre-loaded cards following a June 2022 RBI notice, such ‘pay later’ schemes make itself available in other forms.
From online grocery shopping to food delivery, there is often a BNPL option provided by merchants. However, many users of these online applications are not aware of the credit implications of using a BNPL option. This easy-credit option requires the borrower to make an initial down payment at the time of purchase and the remaining amount can be re-paid within the due period, usually a few weeks or months. As long as repayment is made on time, the borrower has nothing to worry about.
However, delay in repayment can lead to very high interest charge and will also have an impact on the CIBIL score of the borrower. CIBIL score is a person’s credit score which decides their credit worthiness. This is a crucial factor in determining future loan availability and even the loan amount and tenure.
When online shopping app users are arm-twisted into choosing a BNPL payment option, it is very likely that they do not understand what they are getting into. Especially among young users, this can act as a debt trap which can have an adverse impact on their future loan accessibility as well.
To prevent users from inadvertently making use of credit-based payments, online merchants should include greater transparency in their payment options. When they fail to do so intentionally or otherwise, there will be increasing calls for regulatory bodies to step in.