Flipkart Is Now Letting Users Buy Things On Credit With Its Buy Now, Pay Later Option


Flipkart has hit upon a novel way to boost its GMV — it’s not going to charge its users at all. 

Until a month later, that is. Flipkart is now letting customers buy items on credit, with accounts accumulating over an entire month. It’ll then send its users a bill on the 1st of the next month, with payments due by the 10th. Called the Flipkart Pay later scheme, it’s already been rolled out to select users. 

Nobody on OfficeChai’s staff appears to have been deemed sufficiently credit-worthy to be picked, but users have reported finding as much as Rs. 5000 in credit under the My Account tab in their Flipkart apps. This amount can be used to  make purchases on Flipkart without any immediate payments. On the 1st of the next month, Flipkart will send notifications around what their bill was, and the payments will have to be made by the 10th, either through net banking, debit card, or credit card.

Flipkart will hope people pay up on time, but plans to punish defaulters. The company will levy a penalty of Rs 100 for outstanding amounts up to Rs 2,000, Rs 200 for outstanding amounts between Rs 2,001 and 4,001 and Rs 400 for outstanding amounts Rs 4,001 and above, says the FAQ section of Flipkart Pay later. Further defaults will lead to suspension of subsequent purchases from the account.

This might not be a big enough deterrent to prevent willful default in India, given the lengths some buyers seem to have gone to cheat online marketplaces. In Gurgaon, Flipkart users had procured SIM cards with fake documents to make made several orders, replaced them with fakes and demanded refunds; in Hyderabad, users had quickly replaced items they’d received with items of equal weights even as the delivery executive waited outside their homes. A Bangalore-based woman had duped Amazon of Rs. 70 lakh by making 104 purchases with fake email ids. 

With such schemes in operation, simply putting money into people’s accounts might seem unwise, given how people can simply cancel their accounts and create new ones. But Flipkart will hope its number crunching teams will help it choose the people it wants to extend this facility to — Flipkart has lots of information about its customers, including their order histories and addresses, and will hope to analyze this data it to pick people who won’t disappear after making the purchases.

It’s a bold experiment, but with the right actuarial science, it could work. If Flipkart can make sure that the money it loses to the inevitable fraud is less than the additional purchases the scheme attracts, it might end up being quite lucrative for the company. And the value proposition the scheme brings is undeniable — letting people pay next month for big-ticket items could drive a lot of impulse purchases. It could also help build user loyalty — once users are used to paying later on Flipkart, it could make them less likely to move to other marketplaces. And most importantly, Flipkart has done this before — it had made cash on delivery mainstream when it had introduced it nearly a decade ago. Cash on delivery is now the standard payment method for all online marketplaces. Flipkart will hope it can replicate its success with Pay Later.