The advent of Covid-19 has fuelled uptake of Buy Now, Pay Later payment solutions across the Asia-Pacific region according to research house GlobalData.
Ravi Sharma, lead banking and payments analyst at GlobalData, says the pandemic adversely affected consumers’ disposable income, resulting in rising demand for consumer financing and growing e-commerce sales.
“BNPL services have emerged as a major short-term borrowing tool for consumers,” he says.
Consumers can typically use BNPL to spread payments for a purchase over three to six months with no interest or fees to pay, unless they make a late payment.
Sharma highlights Australian BNPL solution provider Afterpay as a success story, after it reported global sales of US$10.1 billion during the first half of the last fiscal year, representing year-on-year growth of 112 per cent. The company added nearly 23,000 new customers daily to its platform during that time.
GlobalData’s E-Commerce Analytics forecasts the Apac e-commerce market to grow at a compound annual growth rate of 17.6 per cent from US$1.2 trillion in 2016 to US$3.6 trillion in 2023.
BNPL is particularly popular in Australia with 5.8 million active accounts, according to GlobalData.
“The entry of global players like Klarna further fostered growth in the country,” said Sharma. “Other Asian markets like China and India have also registered similar trends.”
“In countries like India, where there is low credit card penetration and limited access to formal credit, BNPL has huge potential.”
India’s LazyPay is a well-known brand offering pay-later options across 250 merchant websites and apps and online retailer Amazon introduced its own deferred-payment solution in India last April.
“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,” said Sharma.