Fintechs are issuing BNPL cards; Should you get them?

The fintechs that offer them Slice and Uni cards usually have tie-ups with non-banking finance companies on the back end. Slice issues credit through Quadrillion Finance, a wholly owned subsidiary, while UniCards has a tie-up with Liquilons. Further, for issuance of PPIs, both the fintechs have tied up with State Bank of Mauritius and UniCards also has tie-up with RBL Bank.

this new BNPL The card model has started competing with credit cards. Slice says it has 5 million registered users and is sending over 200,000 cards per month, which puts it behind only two banks in the country. According to media reports, the company recently made headlines for raising $220 million from investors, which is valued at over $1 billion. UniCards founder Nitin Gupta declined to talk about the number of borrowers. However, as per Gupta, Uni Cards has disbursed an amount of 120 crore just in November. at over 80 lakhs, which he paid in June when it was set up.

Both companies allow customers to pay their card bills at the end of the month without interest (similar to banks) or in three installments in three months without any interest. The slight difference is that the Uni card allows customers to choose the repayment tenure per transaction instead of the overall Aadhaar, it says. Since the 3-month interest-free payment plan is more favorable than the one-month one, customers opting for it forgo the cashback and rewards they would have otherwise received. In the case of the Uni card, it comes with a cashback of 1%, while Slice talks about a cashback of up to 2%.

UniCard focuses more on existing credit card holders (with at least 1 year of credit history) and high-end customers, while Slice looks at both existing and new credit customers. The latter offers the least credit limit 2,000 for new borrowers. Uni Card allows customers to withdraw 20-25% of their credit limit to their bank account and spend it from there. Customers who take this money into bank accounts can also withdraw it in the form of cash. The company does not charge any interest for this type of transfer but the interest free period is reduced to 1 month. Gupta said this is more favorable than banks, which charge a fee from the day of cash withdrawal. Slice also allows emergency bank transfers but imposes some fees on them.

Both the fintechs have tie-ups with Visa, but their cards cannot be used for international transactions. “With Slice Card, we do not have any concept of minimum due payment. Customers either pay the money without interest in 3 months or they pay in equal installments over a longer period,” said Rajan Bajaj, Founder & CEO, Slice. The company plans to launch a UPI app that will help its customers Allows to route their UPI payments.For Slice Platform Uni cards, customers who do not pay by the due date can have a revolving balance equal to credit card dues or they can convert purchases into EMIs can.

The pay-in-3 model offers a longer interest rate-free tenure than most banks. However, you forgo cashback of 1-2% of your spend by choosing this. After this period, fintechs charge interest rates that can go up to 30-40% p.a. on revolving balances. Rates on EMI are slightly lower, but not by a huge difference (15-20%). If you are unable to make the payment by converting your purchase into EMI then you may get a more favorable deal.

Cards, like credit cards, are best suited for users who are able to pay their bills on time. Some fintechs like UniCards offer better deals with cash withdrawals. To a certain extent, if the money is repaid at the end of the month, it can be done without any interest cost. In the case of credit cards, cash withdrawals trigger immediate interest bills.

You should note that international spending has not yet been enabled by fintechs. Credit cards, on the other hand, enable international spending and this gives them a huge advantage. Some international businesses only enable credit card payments, making these a must for consumers.