Buy Now Pay Later (BNPL) is one of the trendiest payment methods in Malaysia. It is a payment option that allows its customers to purchase goods or services and defer the payment to a later date.
This flexible payment solution has gained popularity in recent years and can provide several benefits for your business.
BNPL platforms provide your customers with a convenient avenue to purchase expensive items such as smartphones, laptops, holiday packages, and more without having to pay the entire cost upfront.
At iPay88, we offer BNPL services for e-commerce and physical retail from Atome, Grab Pay, and MobyPay, which are among the most popular BNPL options in Malaysia today.
For merchants to understand the importance of accepting BNPL, we have created this Buy Now Pay Later guide explaining how BNPL works and how beneficial it can be for your business growth.
What is Buy Now Pay Later?
Buy Now Pay Later is often abbreviated as BNPL, and it is a payment method that allows consumers to make a purchase and defer the full payment to a later date. With BNPL, customers can buy products or services immediately and pay for them over time, typically in installments.
In Malaysia, this split payment method allows your customers to repay the item’s price through monthly installments. In most cases, BNPL providers offer this service without charging additional interest.
The fixed repayment amounts are automatically deducted from your customer’s debit or credit card at a fixed repayment schedule.
BNPL vs Credit Card
The primary difference between BNPL and a credit card lies in how interest is applied to any remaining balance carried over to the next billing cycle. While credit cards generally charge interest on such balances, some credit cards may also offer 0% installment plans.
However, to offer 0% credit card installments to your customers, you’ll have to have such a facility approved by your acquiring bank, and only customers that have a credit card from that specific bank will be able to enjoy repayments in installments.
For example, if you offer an installment plan from Bank A, only customers who have a credit card issued by Bank A can enjoy it. Customers with credit cards from other banks won’t be able to split their payments.
BNPL is, however, available to all customers, despite the bank that they choose to use.
For your customers to access the opportunity to pay via BNPL, they typically need to visit a merchant that accepts split payments, make an initial down payment (usually equivalent to the first month’s installment), and then settle the remaining balance over the following months.
The repayment period can range from three to six months, depending on the specific BNPL provider your customers choose. However, as a merchant, you’d be receiving the full purchase amount without the need to wait for your customers to repay it in full.
BNPL has gained a lot of popularity as it provides flexibility and affordability for consumers, allowing them to manage their finances more effectively and make purchases without the need for immediate full payment.
Why is BNPL so popular in Malaysia?
Buy Now Pay Later services began to gain traction around 2019 and has continued to grow since then. Various BNPL providers started offering their services to Malaysian consumers, allowing them to make purchases and spread the payments over time.
The increasing popularity of e-commerce and the digital economy in Malaysia has contributed to the rise of BNPL as a convenient and flexible payment option for consumers. BNPL has gained popularity in Malaysia due to several factors:
1. Affordability
BNPL allows consumers to purchase items without having to pay the full amount upfront. This makes expensive purchases more affordable and manageable for individuals with limited immediate funds. By spreading payments over time, Malaysians can budget their expenses more effectively.
2. Financial Flexibility
BNPL provides financial flexibility by allowing consumers to defer payment and allocate their funds for other essential expenses. This can be particularly useful for individuals facing temporary cash flow constraints or unexpected financial obligations.
3. Convenience and Ease of Use
BNPL platforms in Malaysia are often integrated into popular e-commerce websites and mobile apps, making it easy for consumers to access and utilize the service. The streamlined process of making a purchase and setting up installment plans has made BNPL a convenient payment option for Malaysian consumers.
4. Interest-Free or Low-Interest Rates
Many BNPL providers in Malaysia offer interest-free installment plans, especially if payments are made on time. This feature makes BNPL an attractive option compared to traditional credit cards or personal loans, which often have higher interest rates.
5. Increased Consumer Spending
BNPL encourages consumer spending by removing the barrier of immediate full payment. It allows consumers to make purchases they might have postponed or considered unaffordable without the flexibility of spreading payments over time.
6. Rising Digital Economy
Malaysia has witnessed significant growth in its digital economy, with increased online shopping and e-commerce adoption. BNPL aligns with the digital lifestyle of consumers, providing them with a seamless and convenient payment option during their online shopping experiences.
Why is Buy Now Pay Later good for your business?
We’ve already discussed that BNPL is an attractive payment method for consumers, and the number of users who use BNPL is expected to grow in the coming years.
Graphic credit: The Star
However, it’s also important to note that Buy Now Pay Later can be beneficial for business growth due to several reasons:
1. Increased Sales Conversion
By offering BNPL as a payment option, businesses can reduce cart abandonment rates and improve sales conversion rates. Customers who may have been hesitant to make a purchase due to upfront payment can be enticed to complete the transaction when they have the option to defer payment. This can lead to higher sales and revenue for the business.
2. Attract New Customers
BNPL has become increasingly popular among consumers, especially younger generations who value flexibility and affordability. By offering BNPL, businesses can attract new customers who may prefer this payment method over traditional options. This can expand the customer base and increase the reach of the business.
3. Improved Customer Experience
BNPL enhances the overall shopping experience for customers by providing flexibility and convenience. It allows customers to manage their finances better by breaking down payments into manageable installments. This positive experience can lead to increased customer loyalty, repeat purchases, and positive word-of-mouth referrals.
4. Higher Average Order Value
BNPL enables customers to make larger purchases or buy more items at once since they can spread the cost over time. This can result in higher average order values for businesses, increasing the transaction size and revenue generated from each customer.
5. Cash Flow Management
BNPL can help businesses manage their cash flow effectively. Instead of waiting for customers to make full upfront payments, businesses receive the funds from the BNPL provider promptly. This steady cash flow can be beneficial for operational expenses, inventory management, and growth initiatives.
6. Partnership Opportunities
Collaborating with BNPL providers can open up partnership opportunities for businesses. Most BNPL providers in Malaysia offer promotional campaigns or featured listings, which can increase the visibility and exposure of businesses to a wider audience. This exposure can lead to new customer acquisitions and brand recognition.
7. Fully Integrated with iPay88
Accepting BNPL has never been easier, as the most popular BNPL providers are integrated into the iPay88 payment gateway.
Therefore, they can be enabled on your merchant account without any additional integration.
Not only that, BNPL payments are tracked and reported in real-time in our consolidated reports, making your financial reconciliation much more straightforward.
Are you ready to accept BNPL payments?
Implementing Buy Now Pay Later for your business can be a strategic move to drive growth and enhance the customer experience.
By offering the option to defer payments and providing greater affordability and flexibility to your customers, BNPL can increase sales conversion rates, attract new customers, and lead to higher average order values.
Nevertheless, the improved cash flow management and potential partnership opportunities may further contribute to the benefits for your business.
By leveraging BNPL effectively, you can position your business for success in a competitive marketplace and meet the evolving needs of your customers.
However, it is crucial to carefully select a reputable BNPL provider, consider the terms and fees, and ensure responsible financial practices.
Our team of business consultants can help you address any issues or questions that you may have while choosing the right BNPL partners.
