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Healthcare now, pay later: A new way for India

Embedded finance, also sometimes known as ‘embedded banking’ or ‘embedded credit’, is the seamless integration of financial services products into a transaction equation, between a payer and the provider or merchant.

Using an embedded finance infrastructure — integrating banks and lenders, with the retailers, merchants, and the users — the transaction experience between the buyer and the seller can be smoothened.

In the healthcare services industry context, the buyer is the patient or the consumer of health and medical services from hospitals, doctors, clinics, etc., and the merchant is the healthcare services provider. In this equation, when the buyer can pay for their healthcare expense by availing credit on preferential terms, the seller is offering an embedded finance product to the payer.

The key differentiator between an embedded finance transaction and the simple usage of your credit card is the absence of the cost of capital, i.e. the interest rate that a credit card would levy upon that transaction. Embedded finance transactions in healthcare can provide “0 percent Interest Rate Financing”, thereby solving one of the biggest pain points for the Indian healthcare consumer – Out-of-Pocket Expenditure on Healthcare (OoPE).

Indians paid over $72 billion to pay for their healthcare expenses, from their pockets – essentially, their savings or borrowings — reported the NITI Aayog Report of March 2021. Healthcare expenses is one of the biggest reasons why many Indians fall below the poverty line every year. This presents a tremendous opportunity for embedded finance products in healthcare.

It is ironic that Indians can now easily buy a television, washing machine, or cell phone using “no-cost EMI” schemes, but are unable to do so, in healthcare. These ‘Buy-Now, Pay-Later (BNPL)’ schemes are common across retail transactions and have led to a massive increase in consumption.

This consumer behaviour around BNPL transactions, when applied to healthcare retail transactions, can not only alleviate healthcare payment burdens but also drive up consumption for the hospitals or clinics.

Most Indians will defer healthcare treatment due to the lack of financial means to pay for care.

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