The Hidden Cost of Convenience: Financial Impact Of Subscriptions, BNPL, And Microtransactions On Household Budgets

Easy credit and instant convenience once looked like the perfect answer for India’s young consumers. With the rise of equated monthly installments (EMIs), Buy Now Pay Later (BNPL) schemes, and subscription-driven models, spending became quicker, easier, and seemingly lighter on the pocket.

However, as the bills piled up and hidden charges revealed themselves, many—especially Gen Z—began to rethink. In a market as value-conscious as India, the promise of instant gratification is increasingly weighed against the reality of long-term costs.

Santosh Joseph, CEO, Germinate Investor Services, says, “The hidden cost of EMIs and BNPL initially seemed like a great tool to get whatever you wanted quickly. But over time, people saw there were huge hidden costs. Whether it was processing fees, one-time upfront fees, or interest rates maybe not fully understood the first time.”

This is a sign that also explains the phenomenon of the Indian consumer. They like convenience products, but when they understand the total cost, they tend to refrain.

India is a very value-conscious market. Even when it comes to borrowing or splurging on discretionary items, after one or two experiences where they realize the full cost of a phone, a gadget, or a holiday bought through a BNPL scheme or any similar product, people start refraining from it if the cost is significantly higher.

“In fact, we saw a rush by Gen Z toward these products when they were first introduced. But Gen Z is very quick to realize the hidden costs and high charges. Then they start cutting down. If you notice today, there has been a significant decline in BNPL and instant loan offers. It is not that the products disappeared, but the growth has been curtailed because we are seeing a Gen Z that is not only irrational but also rational and savvy when it comes to money,” informs Joseph, adding that “they prefer something that can give them convenience but does not come at a high cost. They know how to make this cost work for them.”

Today, we are beginning to see very visible signs of how even though Gen Z wants instant gratification, they are prudent with their money. At the end of the day, costs matter.

This is not just about BNPL or EMIs. The same applies to subscriptions and microtransactions. Subscriptions for apps or services seem small when taken individually, but they add up over time. Microtransactions in gaming or online services seem harmless but can silently eat into household budgets, if not monitored.

The lesson here is clear. Convenience is valuable, but not when it comes at a hidden high cost.

“Indian consumers, especially the young workforce, are increasingly aware of this balance. They are learning to differentiate between spending that builds long-term value and spending that creates short-term pleasure but long-term costs,” says Joseph.

This shift is helping many manage their household budgets more carefully and think twice before going for easy loans or piling up multiple subscriptions.