Unlike credit cards or loans, there are no fees in BNPL if payments are made on time.
Buy now pay later (BNPL) transaction has thrived as a credit option for e-commerce purchases in Asia Pacific, further accelerated by the COVID-19 pandemic, reports data and analytics firm GlobalData.
The rise came about with the COVID-19 pandemic adversely affecting businesses and consumers’ disposable income, leading to a rise in demand for consumer financing, notes Ravi Sharma, banking and payments analyst at GlobalData. Coupled with growing e-commerce sales, BNPL services have emerged as a major short-term borrowing tool for consumers.
“BNPL provides consumers with the flexibility to pay for their purchases at later dates. In addition, unlike traditional credit cards or consumer loans, there is no fee if payments are made on time,” Sharma said.
Several BNPL solutions notedly flourished in 2020. Australia-based BNPL solution provider Afterpay has reported that its global sales more than doubled to $10.1b in the first half of fiscal year that ended on 31 December 2020, or a 112% growth. It also reportedly added nearly 23,000 new customers daily to its platform in the same period.
There are now more than 5.8 million BNPL accounts in Australia, thanks to local players like Afterpay and further driven by the entry of global players such as Klarna.
“With consumer spending on the rise, BNPL concept presents a huge potential in the APAC region and has the potential to challenge the existing credit models,” Sharma said.
Other APAC markets China and India also registered a similar trend, reports GlobalData. In India, for example, where there is low credit card penetration and limited access to formal credit, BNPL presents huge potential.
Local BNPL player now offers LazyPay offers its services in 250 merchant websites and apps. Global online retailer Amazon also introduced its own deferred payment solution in April 2020.
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