Summary: 

  • BNPL allows customers to pay in installments without having to go through the hassle of opening a bank account and allows consumers to use the service with a simple sign-up procedure.
  • BNPL services can be used for more than just paying for product purchases, but also for services such as transportation, everyday necessities like phone credit, and regular expenditures like insurance. 
  • BNPL has become one of the financial services at the forefront of Gojek’s evolution into a super app.

Southeast Asia’s digital heavyweights Grab, Gojek (soon to combine with e-commerce startup Tokopedia), and Shopee have been competing for ownership of accounts across the region for the last three years, where online shopping has risen due to a massive increase in earnings and increased access to mobile internet, and as innovation across e-commerce grew, payments methods became a hot subject with online vendors going out of their way to create a seamless and painless payment experience, and within this fintech drive, BNPL services are now becoming a more popular field.

The excitement of tech firms for BNPL is fueled by two primary causes. For starters, the information these firms have gathered about their client’s financial life is, in many respects, deeper and more revealing than what a typical bank has. Banks often observe only bigger payments and earnings trends; electronic banking and financial service providers collect granular data, which helps them construct a thorough composite image of consumers’ creditworthiness.

Secondly, credit products provide these companies with access to a large client base for financial services that financial institutions have had difficulty reaching. For many customers in Southeast Asia, picking pay later inside their preferred payment system may well be their first experience with a digital payment service, as well as their first time taking out credit to make a purchase. Businesses want to position themselves as a remedy to the challenge of financial inclusion.

People have become increasingly price-conscious and aware of the necessity of private cash flow as the pandemic progresses, and using BNPL, they can easily monitor their monthly finances. Due to BNPL’s rapid rise in popularity, it will be important for the region’s governments to create legislative frameworks that can govern these emerging fintech services.

We can expect more BNPL services to pop up, from existing companies that will add the option to their checkouts to new operators and traditional financial institutions that will eventually follow the trend, which in turn will create a battle for customer acquisitions, generating a lot of benefits for online consumers in the region.