If you’re someone who follows the retail and fintech industries diligently, chances are you may have been aware of the latest craze in the online shopping scene: Buy Now, Pay Later (BNPL), a new payment scheme that allows you to make your purchase on instalments.
Due to the global pandemic, the Malaysian retail sector has been reshaped following changes in consumer behavior. The financial uncertainties caused by the pandemic have forced many consumers to be more prudent in spending.
This has led many Malaysian fintech companies to implement BNPL as one of the solutions for consumers who are looking for a more convenient, flexible financing option; replacing the traditional payment methods.
BNPL vs credit cards: what are the differences?
In essence, BNPL is a type of short-term financing. For now, Malaysian consumers can shop at selected online retailers that accept BNPL. The BNPL plans on offer may vary depending on which plan provider you selected. Every BNPL plan was designed to be unique by its provider.
Some BNPL plans require a deposit or payment upfront with no hidden fees, while others do not require any fees and interest charges (except for late fees for missed payments); making it attractive to many, particularly shoppers who are on a tight budget.
For BNPL plans that require a deposit, you can pay off the remaining balance in installments over a specific period of time, whether weekly or monthly. There are also a few BNPL plans that allow you to set your own payment schedule.
So, how does a credit card differ from a BNPL plan? Aside from it being accepted by any retailers worldwide, credit cards can be used to pay for your bills, purchase petrol, and many other types of expenses. If you pay the card’s balance in full every month, you won’t accrue interest. That said, several credit cards would charge a few fees, such as late payment fees, foreign transaction fees, cash advance fees, balance transfer fees, and an annual fee.
The key BNPL players in Malaysia making shopping more accessible
Compared to credit cards, the eligibility criteria for BNPL plans are normally less strict, though that doesn’t mean everyone can simply apply for BNPL. There are still several conditions to be met, subject to providers.
There are already a few key players of BNPL in Malaysia that consumers can choose from. Some of the most popular ones include the following:
SPayLater is Shopee's BNPL payment method. You can make a purchase immediately and pay for it next month, or as instalments across a few months, with the option of spreading out the payments over one, two, three, six or twelve months (applicable only to select users). Processing fees will be added to the total order amount, and the fees depend on your preferred payment plan.
PayLater is a payment method that allows you 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.
This service is available for eligible Grab users only. Eligibility depends on various criteria such as ride patterns and GrabRewards tier, among others. Every user will be assigned a unique PayLater limit. As such, your limit may be different from other users.
Hoolah requires you to pay ⅓ upfront with no hidden fees. The cost of your purchase will then be divided into three interest-free instalments. Payments are automatically charged from your debit or credit card every month. There are no additional fees for early repayments.
MyIOU’s BNPL plan allows you to split your purchases into 2, 3, or 6 monthly instalments with zero interest. Upon approval, RM1,000 will be credited. Tenure for instalment plan is predetermined by respective merchants. A small fee of RM5 or 1% on outstanding amount (whichever higher) will be incurred for overdue payment.
Atome automatically splits your bill into three equal payments. You'll pay the first payment at the point of purchase. The next two payments will be spread 30 days apart, with no interest or hidden charges.
Rely allows you to pay for your purchase in four interest-free payments, due every two weeks. There’s no extra fee to pay if you make your payments on time. A late fee may be applied for missed payments.
Split is the first BNPL service to be certified as shariah compliant in Malaysia. Split operates in accordance with Islamic Beliefs; where there are zero fees, zero interest, no late fees and no processing charges. Split users will only pay for the price of their order and nothing more.
Instead, merchants are charged a percentage success fee for every order processed by Split. Split is unique in the BNPL space as it does not monetise from late fees or other charges that are conditional upon users missing payments.
You can apply for a BNPL plan if you meet these minimum requirements:
At least 18 years old and above
Credit/debit card issued by Malaysian financial institutions
A Malaysian NRIC (MyKAD)
Malaysian mobile number and email address
According to the Malaysia Buy Now Pay Later Business and Investment Opportunities (2019-2028) report by ResearchAndMarkets.com, the BNPL payment adoption in the country is expected to grow steadily over the forecast period. BNPL’s Gross Merchandise Value in Malaysia was projected to increase from US$ 271.8 million in 2020 to US$ 3,571.8 million by 2028.