It shouldn’t come as too big of a surprise to see BNPL gain more momentum. The APAC region continues to express an appetite for buying goods now and paying in installments. In addition, new data by Mastercard confirms strong momentum is building in China, Singapore, and Malaysia.
APAC Wants More BNPL Exposure
The concept of paying for goods and services after acquiring them is appealing. It makes it easier for consumers to manage and organize purchases. However, some worry this leads to irresponsible spending, as many small BNPL payments will add up. The appeal of paying $40 for one item and $80 a month for service is excellent on paper. However, consumers still need to ensure they can afford $120 per month.
Interestingly, this concept continues to become more commonplace in the APAC region. Mastercard’s research identifies several key nations. Malaysia sees tremendous BNPL usage for very expensive items, noting a 10% yearly increase. Singaporeans primarily use buy now, pay later, for expensive goods and services. In China, it is the go-to option for moderately expensive items.
What is even more interesting is the ongoing user growth increase. While Malaysia has a 10% YoY gain, Singapore sits at 13%. China saw a mere 3% increase, which still represents a large group of people due to population density. Consumers continue to look for merchants accepting the BNPL method, either online or in-store. Similar trends occur in India and South Korea, although primarily for clothing and apparel.
Continuing this growth curve across APAC will pose some challenges. Although consumers want to use BNPL more often, merchants might not be so inclined. It makes sense for expensive items, clothing, and apparel. However, China and Thailand see increased adoption among wholesalers and hypermarkets. That is remarkable, as those locations shouldn’t see too many expensive purchases. However, it signifies the convenience of buy now, pay later.
Potential Landscape Changes Ahead
One concern in the BNPL sector is the traditional structure. More specifically, these short-term financing options are often interest-free. That enables booming growth in APAC and other regions worldwide. However, several providers face a crunch and have to lay off employees to reduce costs. That may indicate the interest-free approach isn’t sustainable in the long term.
Moreover, industry forecasts indicate that BNPL will continue to accelerate in APAC. However, the year 2022 has been very brutal for all companies and consumers alike. With liquidity crunches happening everywhere, BNPL can become the go-to payment solution for households struggling to make ends meet. Even so, it only delays the cost of living rather than solves it.
Consumer debt concerns are already mounting across APAC. BNPL facilitates overspending, putting consumers in higher debt over time. As a result, regulators have been urged to introduce more legislation and rules promoting fairness and transparency. More regulations and rules can make life more difficult for BNPL providers. However, consumer protection should always be the primary concern.