Buy-now-pay-later focused firm Snapmint making life more affordable

Buy-now-pay-later focused firm Snapmint offers convenient and transparent purchase journey with no extra costs. Consequently, over 250 D2C brands have chosen Snapmint to drive their customer acquisition and sales. Abhineet Sawa, co-founder, Snapmint, in an exclusive interview with Bizz Buzz, says: "Currently, we have 7 million app users. Our BNPL transaction volume has grown six times in the last one year. Our goals are to expand the merchant network by 2x and customer base by 3x by the end of this fiscal year. We have seen 5x growth in our electronics segment. We have seen 8x growth in women customer adoption, we see that triple in one year's time. There has been a massive adoption in beauty, wellness and health segments, many brands see this as an online version of offline sachets purchases"

Elaborate on the business of Snapmint?

Snapmint is the most user-friendly instalment BNPL (Buy-now-pay-later) option for purchase needs of GenZ customers. Most GenZ shopping needs are focused on electronics, gadgets and fashion. Snapmint offers the most convenient and transparent purchase journey with no extra costs. Consequently, the over 250 D2C brands have chosen Snapmint to drive their customer acquisition and sales. Snapmint is an RBI approved NBFC licence holder. It has a simple two-step process which reduces the need for extra documentation steps at our consumer end. NBFC licence gives our partner brands confidence on continuity of their consumer affordability strategy.

What were the last fiscal year's earnings, and what is your goal for the upcoming fiscal year?

We are at an early stage of business, we have profitable unit economics at a customer level. However we are making massive tech and AI investments to improve customer experience while reducing risk of fraud. With a customer base that is exponentially growing everyday, Snapmint makes instalment BNPL a convenient option like never before. There is no physical documentation or credit card required.

Currently, we have 7 million app users. Our BNPL transaction volume has grown six times in the last one year. Our goals are to expand the merchant network by 2x and customer base by 3x by the end of this fiscal year. We have seen 5x growth in our electronics segment. We have seen 8x growth in women customer adoption, we see that triple in one year's time. There has been a massive adoption, beauty, wellness and health segments, many brands see this as an online version of offline sachets purchases.

The importance of the BNPL theme and the businesses connected to it. Describe your target numbers for the brands connected to your BNPL as well.

The concept of instalment BNPL (aka EMI shopping) is not new to India. Over the last 15 years, millions of consumers have made durables, automobile, home purchases on instalments. However, this was restricted to the top 2-5 per cent wealthy private bank customers. Further, the offering was limited to high value purchases.

Snapmint is changing who, what and how. We are empowering GenZ and tier 2-5 customers to avail BNPL. Our technology is enabling GenZ customers to make fashion/lifestyle and electronics purchases. And most importantly we are doing all of this with full transparency, no hidden costs for customers without asking for too much documentation. Our aim is to make instalment BNPL as available and prevalent as UPI.

How is India developing as a market for BNPL players? What did you think of the pandemic and the aftermath?

As I described before there is a huge opportunity to increase the scope of BNPL. Firstly, from the perspective of financial inclusion and providing credit access to millions of Indians (Please note today only 45 million out of 550 million PAN card holders have access to credit in India). Secondly, bringing instalment BNPL to numerous categories such as fashion, gadgets which have traditionally not been viable for incumbents.

Post BNPL has received massive tailwinds. 700 million consumers are now on the internet, to leverage BNPL offerings by sitting on any remote corner of the country. RBI and the government have pushed numerous online friendly upgrades in the ecosystem such as online KYC, recurring payments on UPI and account aggregator based structural financial data sharing. All these have simplified the customer adoption of BNPL. Regulated NBFC players like Snapmint see this as a massive opportunity to grow our consumer and merchant bases.

Would you kindly explain the advantages of BNPL for different income groups?

From the instalment BNPL perspective, there are two broad customer buckets, the affluent 45 million who have either a credit card, and the rest. The first segment, given their affluence, typically uses instalments only for large price points e.g. home, automobiles and consumer durables. Their instalment purchases are typically with traditional banks and NBFCs.

Consequently when we partnered with lots of home furniture, mattress and premium watch brands, we saw a huge adoption from customers from this segment. 70 per cent of our transactions have no extra costs (no interest/ no processing/convenience charges). We work with our merchants to offer our no cost EMI product. Many customers make early payments, we charge nothing extra and in some cases give customers a discount for paying early. Many genuine customers get unintentionally 1-3 days late. We do not penalise them. But if you do that with most traditional alternatives, there is a horribly large penalty charge. This is the benefit for the credit enabled affluent 45 million.

With the 500 million customers who do not have credit lines, it is about convenient access to instalment purchases. 60 per cent of the workforce is unemployed or is in unorganised/SME sectors. They are not the usual targets of banks/credit card issuers. When it comes to the Gen Z segment, access to financial products is even worse. Many in this segment do not buy a higher quality or more aspirational product due to budget constraints. They end up delaying/forgoing a purchase or settling for a less aspirational/lower quality product. So being able to make instalment purchases on honest, transparent terms without having to worry about hidden costs, late fees and interest/processing charges is an immense benefit.

When you go further deep into the GenZ segment, they are buying a lot of middle income segments, fashion, electronics and gadgets become key areas for BNPL. They are not buying home appliances as often. We allow them to make convenient instalment BNPL purchases at no extra cost. It usually takes two minutes for a customer to make such a purchase via Snapmint. We see young men buy whey protein and women buy hair colour on instalment payments. When we started we could not have imagined such use cases.

India is a sachet economy. People know that they need shampoo year round but sachets flourish. With instalment BNPL customers can convert large aspirational purchases into sachet payments. Sachet payments increase consumption in the economy. Instalment EMI on Snapmint offers customers an honest, transparent option to make sachet payments.

Please let us know about Snapmint's business, particularly from low- to middle-income groups for more expensive things. Which age groups are you targeting in the future to increase your revenue?

At Snapmint we are focussed on GenZ customers. 80 per cent of our customers are within the age bracket of 21-30. These customers are focussed on fashion, gadgets and electronics. At this moment we are focussed on three things to grow. Firstly, we are partnering with more and more brands to increase options for our customers to buy on instalment BNPL. Secondly, our product and credit team is constantly working on ways to simplify the customer purchase process without impacting our NPAs. Thirdly, we spend on marketing to build awareness of our product, since both the category and Snapmint are in relatively nascent stages.

How many low-income populations profit even from inexpensive things without having to pay interest? How is your business changing or benefiting from the BNPL for low-ticket items, especially those with no interest?

70 per cent of our purchases are where the customer is paying neither interest nor any other form of convenience/processing charges. We do this by working with our partner brands who want to invest in acquiring these customers. Brands see investment in affordability as a means to convert these tier 2/ GenZ audiences into customers. Usually the ROI of this investment is much higher than other growth investments in their kitty.

Do you believe that, in light of RBI's strict restrictions for BNPL, BNPL enterprises will endure and experience favourable growth prospects in the next three to five years?

BNPL is not new to India. RBI has essentially restricted unregulated entities from taking on credit risks, and companies who do not have approval to issue credit cards to take risk on revolving credit lines via the prepaid card route. Both are very prudent measures to not just protect consumer rights but also solve for capital adequacy risks that can come if revolving credit is being issued by non banks or by non regulated entities lending in the market. As long as non banks continue to work under the regulations laid down by RBI, we firmly believe that the BNPL market will grow 80 per cent year on year.

What are the advantages and benefits to consumers of using BNPL rather than other modes of payment gateways?

Brands are heavily investing in D2C channels for various reasons. Instalment BNPL is a key driver for converting customers. Instead of selling discounted products or lower priced products, BNPL solves customer affordability and drives conversions. Brands are able to see 12-15 per cent higher conversion. That is why, brands see 30 per cent higher order value on Snapmint orders Vs other payment options. Additionally, for some categories such as fashion, electronics and personal care brands see Snapmint BNPL as a way to capture the market segment in tier-2 cities as well as GenZ.

We believe that there is huge potential in the BNPL segment. Snapmint is thus scaling up our presence in the segment. There are about 22-25 million instalment BNPL customers and the sector is witnessing strong growth. It is predicted to expand by an astounding 11 times to $43 billion by 2025, at a CAGR of 80 per cent. Our digital platform, Nimbus, with a focus on data and performance, helps offer partners like Snapmint customised and easy-to-access solutions. Snapmint has developed a unique business model in the BNPL space and has already been able to create a niche for itself.