India’s informal BNPL witnesses a surge in repayments this Diwali

By Leandra Monteiro

People are shopping more on credit and they are paying back too. India’s oldest form of BNPL, a form of buying at local stores without paying upfront, saw customers rushing in to make repayments, making this Diwali brighter than ever for millions of mom and pop stores. Most of these shops usually struggle to get their dues back in time, however, this festive season saw more than 30,00,000 customers coming forward to settle their credit. These and several other stats about the festive shopping season in unorganised retail are part of a data report by OkCredit, a digital bookkeeping app that helps retail SMBs keep a track of their credit and receivables. The data has been compiled on OkCredit’s active install base of 5.2 million merchants.

Repayments are critical to small merchants. The more they can recover, the more they can plough back in business. The data points to a virtuous cycle wherein more repayments have enabled merchants to extend more credit, which in turn has led to a growth in customers. Credit given per active merchant on OkCredit went up by 23% and these merchants added 1 million customers in the festive period.

Digital payments have played a huge role in helping mom and pop stores recover credit. As per OkCredit’s data, the number of credit lines settled digitally have gone up by 100% since last year, showing adoption of online payments in digital book keeping.

The increased repayments and growth in retail SMBs also points to a healthy recovery in the economy, especially tier-2 and tier-3 towns, as these towns account for a significant chunk of OkCredit’s merchant base.

And even though scores of merchants across the country have grown, Ankit Ralhan’s story is worth mentioning. Ralhan, an electronics supplier based out of Hisar in Haryana has seen his business rise 129% since last year.

OkCredit’s data shows that there has seen a 70%  increase in retail SMBs  adopting a digital solution to manage their books. Out of 35 states and union territories, 25 have seen business growth as compared to last year, while others have remained more or less stagnant. Merchants in states such as Kerala and Karnataka have seen 8% growth in business. The North-Eastern states have seen the highest growth, topped by Manipur where transactions per merchant increased by 22%.

Gaurav Kunwar, Cofounder & CPO at OkCredit said, “SMBs were among the worst affected during both first and second wave of Covid. While the festive season brought cheer to several sections of the economy, we wanted to measure category-wise impact of the Diwali shopping season among retail SMBs. It was heartening to see credit recovery being high, in fact, in places such as Kerala, Tamilnadu, Manipur, it was 30% higher than rest of the country. At OkCredit, we have put in sustained efforts to make selling on credit easier for merchants through our enhanced payments feature, app experience and awareness campaigns”

The economy is witnessing a bounce back in every sphere and retail SMBs are a key driver for the same. Indian retail is powered by over 60 million local businesses, representing 95% of the $1.1 trillion retail market. Digital adoption is rising rapidly among retail SMBs with a lot of them using digital bookkeeping and payment solutions for business growth.