Pay later services are just like your credit card; they offer interest-free credit for a specific number of days, but the repayment is directly linked to your savings bank account for direct debit. 


Not everyone is eligible to get a credit card. Credit card companies have tightened the criteria to issue credit cards. Applicants have to have an impeccable credit report, a healthy credit score and a good income to prove their repayment capacity to avail a credit card in the market. Also, there is a general apprehension in many low-income earners in getting a credit card as they know that credit cards can lead to bad debt. 

Additional Read: Best Credit Cards For Low-Income Earners

That is when lenders came with the idea of Pay Later credit services. 

Many e-commerce sellers have tied up with banks and NBFCs to provide this service to their customers. This service attracts buyers, without a credit card, to purchase high-value items by availing of a short term credit facility. 

What are some of the attractive features of pay later services?

  • They are processed instantly.
  • There is no documentation needed. They calculate your eligibility based on your phone number, PAN and Aadhaar details.
  • It allows you to make purchases on credit without the need for a credit card.
  • Comes with convenient repayment tenure of 3 – 12 months to suit your needs. Pay Later services are generally linked to your savings bank account and your credit score.

The Concept of Embedded Finance

Embedded Finance refers to credit relationships of the above type. The primary objective is to attract customers who don’t hold a credit card but want to purchase consumer durable goods on credit. Here a company partners with a lender, who verifies the customer and offers them a credit line.

Some popular Pay Later Services in India are: 

  • LazyPay – partners with Swiggy, Flipkart, BookMyShow, MakeMyTrip, and Urban Company
  • Simpl – partners with Zomato, BigBasket, Fresh2Home, Sleepy Owl Coffee
  • Paytm Postpaid – available to all users
  • Slice – standalone app available for all users
  • Amazon Pay later – partners with Capital Float and IDFC First Bank
  • Ola Money - tie-up with Aditya Birla Finance Ltd

How to avail of the pay later service?

Pay later service is mostly offered by e-commerce services like Amazon, Flipkart, Swiggy, Bigbasket, etc. You may receive a message or notification informing you about the pay later service and asking you to enter a few basic details to check your eligibility. 

  1. They will usually ask you for details like your phone number, PAN and Aadhaar. 
  2. Once you enter these details, they will ask you to link a Savings Bank Account with your pay later account for direct debit of the monthly EMI.
  3. After that, it will show your eligible credit amount and ask for your approval to process the application.
  4. Once you agree to the terms and conditions, the credit will reflect on your pay later account on that particular app or service.
  5. Every time you make a purchase and go to bill payment, you can see this pay later account as one of the payment options.
  6. The bill amount is divided into equal EMIs, which will be debited from your bank account every month.

Points To Remember When You Go For Pay Later Services

Though pay later services sound very easy and attractive, there is always a catch: 

  1. It is similar to a personal loan or a credit card. So the lender will check your credit score before approving the service. 
  2. Pay this EMI on time, just as you do your other EMIs, otherwise, it will be reported in your credit report and have an influence on your credit score.
  3. Companies usually offer the pay later option for free, though some may charge a flat price or a one-time membership fee. Before you join, make sure you understand the charges.
  4. During the onboarding process, the e-commerce company would display the name of its partner. Make a note of it because it will appear on your credit record as a lender.
  5. The credit limit on pay later services are relatively low and so you wouldn’t be able to make high-value purchases

What is the alternative for pay later services?

Credit cards are your best bet if you really want to make big purchases and have to go for credit. If you think that you wouldn’t be eligible to get a credit card, there are a few simple steps to improve your credit score so that you can easily get approved for a credit card. 

You can read more about How to improve your credit score?’ here

Experts advise refraining from going for Pay later services if you already have a credit card. Credit cards offer you a better credit limit and come with an interest-free period. Credit cards offer up to 50 days while most pay later services bill in 30 days. 

Conclusion: Are pay later services really advantageous?

Experts opine that pay later services are currently still evolving. This service needs more regulations and clarity to establish itself as an alternative to credit cards. Though these services start by offering you a lower credit limit, they are likely to keep increasing the credit limits based on your repayment history and usage.

Though slow, pay later services are likely to emerge as an alternative to credit cards, especially among consumers who are wary of credit cards and credit repayments. 



  1. How many days of interest-free credit can I get with pay later services?

It depends on the lender. It can range between 30 – 45 days. 

  1. What is the interest rate on pay later Services?

Pay later services charge similar interest to credit cards. They range anywhere between 2.5 - 4% per month. 

  1. Do they check my credit score when I apply for a pay later service?

Yes, your credit score is checked when you apply for a pay later service. 

  1. How do I make repayments to pay later services?

Repayments are usually auto-debited from your bank account. You have to enter the bank account details during the application process. 

  1. Can I have multiple pay later accounts? 

You can have only one pay later account from a bank, but you can have other pay later accounts from different lenders.