Payments company PayU India will be investing $50 million in its product LazyPay over the next few years. Though the product has been in pilot since March 2017, the company is officially launching the service now. LazyPay is a premium deferral payment facility which will allow users to to purchase now and pay later.

PayU acquired the product when it bought Citrus Pay for $130 million. Essentially, LazyPay will allow the company to become an underwriter of transactions and charge consumers on a fortnightly basis. The product is aimed at people who transact digitally in the range between Rs 500 and Rs 2,500. The credit facility could extend for amounts from Rs 3,000 and even up to Rs 10,000, depending upon customer behaviour.

Note that this is offered only to select customers LazyPay pre-decides whether an online user is eligible. Users are selected based on a trust score, based their online transaction purchases. More than 10 million users have been qualified for LazyPay so far and the system is equipped with algorithms that will write off debts in real time. The algorithms put in place are based on 80-odd variables for underwriting debts.

LazyPay appears as a payment option at the time of checkout on websites and apps integrating the product. The compay added that has five big merchants and more than 12 smaller merchants onboard including Zomato, Box8, Jazz Cinemas, Netmeds and Innerchef.

So far, the company says it has already clocked over 5,000 transactions with an average ticket size of Rs 600-650. In addition to this, 20% of the customers have done 2 or more transactions so far. “In the range of Rs 500 – Rs 2500, consumers generally pay online for movie tickets, food, groceries, small bills (phone, electricity, water or DTH), etc,” the company  added in its release.

Taking on PayPal?

Note when PayU was acquiring Citrus Pay, we noted that the company might be looking to take on PayPal due to the fact that both companies had many similar product offerings. PayPal has a product which offers credit to buyers to complete a purchase and pay later. Both LazyPay and PayPal said that the credit facility will help in higher conversions for merchants.

“In 2015, $ 4.4 bn revenue was lost due to 20 – 30% of transactions failing at the payment page. Hence, there was a need for a product which is faster and can give higher conversions,” Jitendra Gupta, managing director at PayU India said.

PayPal’s credit product represented about 2% of the company’s total payment volume processed or around $1.62 billion in the March 2016 quarter. Paypal CFO John Rainey Rainey said that the basket sizes on purchases using credit were on an average 20-30% larger. “Credit benefits PayPal in many ways beyond just a payment transaction. Credit reduces cart abandonment, leading to increased conversion for merchants,” he added.

Image credit: Flickr user Jason Saul under under CC BY 2.0