'Buy Now, Pay Later' has emerged as a payment trend that is rapidly rising across Asia. Through this method, customers can purchase what they need now and pay later via monthly interest-free repayments using debit or credit cards. Historically, consumers without a credit card would not be able to pay in instalments. With Buy Now Pay Later (BNPL), this service offers greater flexibility and convenience in making payment and has begun to rapidly grow in popularity among Malaysian shoppers.
BNPL payment options are showing up across a wide scope of retail businesses in Malaysia, ranging from fashion to home decor and car accessories. However, the accessibility and ease of using BNPL payment methods is raising concerns that consumers may be susceptible to spending beyond their means, and in extreme cases, accumulating unnecessary debt in the long haul. When used responsibly, BNPL can be particularly beneficial especially during the COVID-19 pandemic, which exacerbated a rising pay imbalance. BNPL has been a timely relief for Malaysian shoppers hoping to stretch the value of their ringgit and avoid getting into long-term debt.
The advantage of BNPL is that this service enables underbanked individuals - those who don't have a credit card, don't want to use one or have no access to one - to split their purchases into 3 interest-free repayments. This empowers Malaysians to purchase necessities that they need, while offering greater flexibility to manage their spending and purchases more effectively.
Growing preference for alternative payments
According to a UOB ASEAN Consumer Sentiment Study, six out of 10 Malaysians rely on various forms of contactless payments - mobile banking topped the list as the most popular option, with 69% of Malaysian respondents who said they used mobile payments more often during the pandemic.
Other contactless payment methods that have become increasingly favoured by Malaysians include:
Quick Response (QR) Code Payments (65%)
Online Banking (65%)
Mobile Wallets via debit or credit cards (60%)
The same study also revealed the contactless payment preference of each age group amongst Malaysians - there was a strong preference amongst millennials (aged 24 to 39) in mobile banking (75%); 76% of Baby Boomers (aged 56 and above) leaned towards Internet banking; while Generation X (aged 40 to 55) preferred QR code payments (64%). UOB Malaysia said in spite of the growing popularity of contactless payments, 66% of the respondents utilized physical cash in any event once a week. The survey also showed that nine out of 10 customers will go completely cashless only if more initiatives are set up to accelerate digitalization.
The E-commerce Boom
With online business deals estimated to shape almost 17% of all retail deals before the end of 2021, and purchases made through mobile phones reaching $729 billion by 2023, it is clear that e-commerce is a mutually beneficial solution for both consumers and businesses.
Given the current circumstances, digitalisation will be the route forward for retailers. With small and medium businesses making up 98.5% of business foundations in Malaysia, these organisations will need to make a strong digital pivot quickly to keep up with the changing consumer preferences and to endure through the pandemic, such as integrating BNPL at checkout.
Offering a BNPL payment option at checkout allows shoppers to make purchases they need now and pay later in interest-free repayments, which in turn drives conversion and growth for retail businesses despite a sluggish economy during this time. With the acceleration of the e-commerce and e-payments industries, the BNPL payment option will no longer be good to have, but a must-have for many businesses and consumers alike, as the benefits it brings to consumers and merchants are undeniable.
Get the things you want and need today via hoolah’s Buy Now, Pay Later service. For more information, log onto hoolah.co or download the hoolah mobile app on Apple Store and Google Play Store.
