Travel Now, Pay Later: A Debt Trap?

Travel websites are gaining from marketing push for 'buy now, pay later' products. It's not in consumer interest to fall for these 'zero-cost EMIS'.

- Avneet Kaur

TRAVEL TO MALDIVES on packages starting ₹7,916…or just pay ₹15,000 and enjoy a Thailand tour, says a Chennai-based travel website. Plan a vacation to Ladakh at ₹5,000 per month, says SanKash, a provider of buy now, pay later (BNPL) solutions, with ‘per month’ written in microscopic font. Another EMI solution provider, emibaba.com, is offering Thailand holidays for ₹1,800 per month and Dubai visit for ₹2,400 per month. You don’t need money to travel, says Zyppys.com, another provider of BNPL services.

Numbers show that such enticing BNPL offers are helping brands sell their expensive products and services to consumers who cannot afford them. The Indian BNPL market grew at 321% CAGR in terms of gross merchandise value (value of loans disbursed) during FY19-FY21, says Ken Research. ZestMoney, a consumer lending fintech platform with 17 million registered users, saw a 300% increase in transactions in 2021 compared to 2020 with travel being the top growing category. There was a 2.3 times rise in number of travel transactions; of this, 50% was in November and December 2021.

Travel BNPL or travel now, pay later schemes offer fast loans for travel. The loan provider or fintech platform gives consumers the option of paying back after returning from the trip in instalments without interest for a period ranging from a few days to a few months, usually up to three months, after which it starts charging interest. But is this as simple as it seems? What is the actual cost for borrowers? Should travellers opt for such schemes? Let’s dig in.

Pent-up demand