The financial uncertainty caused by the pandemic has taught consumers to be more cautious with their spending habits. Due to that, many fintech companies, particularly in Southeast Asia, seized the opportunity to implement buy now pay later (BNPL) solutions, replacing traditional financing options with more convenient, alternative payment methods.
Source: Hoolah
Hoolah, a Singaporean BNPL solution provider for online e-commerce platforms, has experienced a 600% surge in order volume from May 2020 until May 2021. Its general manager Jason Wong said the massive growth is a testament to the encouraging consumer demand for BNPL services across various categories. Hoolah also operates in Singapore, Malaysia, and Hong Kong, and is now working towards expanding into other Asian markets.
Source : Grab Pay Later
Meanwhile, tech giant Grab has been providing a BNPL option since 2019. Their PayLater solution is a payment method that allows customers to order Grab rides, GrabFood, GrabExpress and purchase from selected online merchants and make a single consolidated payment for them at the end of the month. Even GoJek, Grab’s biggest competitor, offers a similar product in its home country of Indonesia.
Besides them, players including Razer, Kredivo, Traveloka, and Oriente have also jumped at the opportunity to fill this sizable and potentially lucrative gap. What makes BNPL enticing is that it provides an ease-of-use and more flexible solution that enables consumers to split their purchases into three interest-free monthly repayments, utilising existing credit or debit payment instruments from any financial institution at no additional cost and no hidden fees. This all ultimately equates to better turnover rates for businesses who can now offer an alternative payment solution to their customers – one that is ostensibly friendlier and more manageable than full upfront payments or even credit cards.
Due to its newness, there exists plenty of opportunity within the BNPL landscape for all stakeholders involved. There is no dearth of service providers, and the upsides for both merchants and consumers are evident. Growth in the scene is also expected to carry on an already bullish trend, with SE Asia's BNPL market cap expected to grow from USD 7.3 billion in 2019 to USD 33.6 billion in 2027, reported by Mashable SE Asia. With the number of users growing significantly, BNPL providers will continue to receive funding from optimistic investors.
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