PayU Finance, a digital lending player backed by Prosus Ventures, has seen its buy-now-pay-later (BNPL) segment double in a year and touch a consumer base of 3 million. The firm, which has seen its lending business touch 70 per cent of pre-Covid levels, is now aiming to provide full-stack financial services to its customers.
Prashanth Ranganathan, chief executive officer (CEO), PayU Finance, believes that in the next five years, the company will be able to create a loan book of $1.5 billion — combined between LazyPay and PaySense, making it one of the largest digital lenders in the country.
“Over the last year, one of the significant transformations has been that we have managed to bring credit to consumers. We are now systematically looking at bringing more end-to-end digital services to them. LazyPay has 3 million users, and now, we want to offer other financial services like saving, insurance and wealth management, among others, to this segment. So, starting from BNPL to full stack financial services, that’s how we see ourselves,” said Ranganathan.
BNPL’s offering that it launched in 2017 saw a huge adoption during Covid as it allowed users to make use of deferred payment mechanisms for small-ticket buys in the range of Rs 300-500. The success of this has also propelled the company to offer this mechanism for large-ticket transactions.
“Within BNPL or LazyPay, we have two segments or avatars. The first is a deferred payment product that caters to small-ticket transactions, and it is all about convenient payment. It is not about giving credit. Something similar to a UPI or wallet. We have seen this growing phenomenally for us,” added Ranganathan.
At present, LazyPay is available across over 300 merchants, which include players like Swiggy, Zomato, Samsung, Dunzo and GoAir, among others.
In August of 2020, the company also launched its second version of LazyPay for big-ticket purchases like TV, laptops and refrigerators, among others. Ranganathan said that consumers have had two options of payment: Either use their credit card and convert that to EMIs (equated monthly instalments) or take an EMI/loan from a lending firm.
“BNPL is not a loan nor a credit card that many people feel is an unnecessary hassle due to interest charges. Also, banks have not made it simple for consumers to understand what they are getting into if they use a credit card to take loans. Besides, the new generation does not want to get into long-tenure credit as a utility,” he said.
To give this segment a further boost, PayU will bring in some large merchants to its ecosystem that will go live in a few weeks. “By the end of this year, we will do Rs 80-100 crore per month of lending in this segment as it is massively under-tapped,” said Ranganathan.
So far, the company has disbursed about $300 million in credit and it now wants to add new products. With Covid taking the NBFC segment by surprise last year, many preferred to go slow in lending. PayU, too, adopted the same strategy. With a parent like Prosus, the company did not have issues with access to funds, but it chose to go slow to see how the market performs. Going ahead, the company will focus on three key strategies.
“First, since we have more tech, data science and capital than most, we created a lending OS (operating system), which allows us to fund lending activities of partners. We have a lot of neo-banks, and finance apps coming up and all are saying let us monetise the consumer by giving credit,” he added.
Second, PayU wants to be a much bigger player in the affordability checkout segment. “You will see us doubling and tripling down in checkout finance. It is a big strategic priority for us. And finally, we want to bring to our consumers offerings beyond credit,” he said.