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THE growth of the “buy now, pay later” (BNPL) method has increased with the rise of e-commerce during the onset of the pandemic as more consumers shift to online shopping.

Industry players are of the view that the payment method will become the preferred option among millennials and Gen Z due to its flexibility that enables this group to spend without worrying about interest fees.

Among the widely used BNPL platforms is Hoolah, which saw tremendous growth in the last year with more than 400% user expansion and a doubling of repeat usage.

The Singapore-based e-commerce service currently has over 1,000 merchant stores in Malaysia ranging from fashion, beauty, home and lifestyle, including local and global brands.

Hoolah co-founder Arvin Singh said the pandemic made consumers more thoughtful about their personal cashflow during the period.

BNPL is a popular payment option among shoppers as they find it more palatable to pay a fraction of the full price for an item at no interest or additional fees, he said.

“We definitely see BNPL gaining ground as a preferred payment option among the millennials and Gen Z groups.

These are consumer groups who are savvy shoppers and value payment flexibility, as well as personal cashflow.

“With the global BNPL market expected to reach US$33.6 billion (RM139.44 billion) in 2027, the prediction is that there is going to be a massive growth rate over the next five years.

Although BNPL is still fairly nascent in South-East Asia, it is projected to be the fastest growing online payment method in Asia, with a 64% growth rate by 2024 — and we’re very excited to be at the forefront of that growth here,” Arvin told The Malaysian Reserve (TMR) via email.

Another BNPL player that saw a pick up in users in the past year is Atome, which has over 500 merchant partners and brands in Malaysia.

Atome Malaysia and Singapore GM Trasy Lou-Walsh said it saw order volume grow by 100 times, while its merchant network grew by five times in the first half of 2021. Its consumers are also growing on a 20% monthly basis in terms of new application downloads and usage.

“BNPL is expected to double its market share in Asia Pacific, according to a FIS-Worldpay Global Payments report.

“For the younger generation of consumers, they value the flexibility to manage their budget and maximise rewards/promotion.

“They also look for simpler, easy, transparent ways to pay and manage their budget, with zero interest or fees,” she told TMR.

Atome has presence in nine markets — Singapore, Indonesia, Malaysia, Hong Kong, Taiwan, Vietnam, the Philippines, Thailand and mainland China — with more than 5,000 online and offline merchants in the region.

Lou-Walsh said the group targets to expand its Malaysian retail and consumer base up to 10-fold by the end of the year.

Recently, HSBC Bank Malaysia Bhd also launched its Visa Instalments, which is a new credit option to establish fixed repayment terms for select purchases over a set period of time.

The instalment plans offer zero interestrate starting from three months, with a minimum purchase of RM300 and up to 36 months for purchases of RM2,000 and above.

“With Visa Instalments, we are able to expand and offer instalment plans beyond the usual big ticket items and long tenures traditionally associated with banks.

“We can now enable smaller ticket size items and shorter tenures to drive payment convenience and flexibility for shoppers on various merchants’ online sites,” HSBC Malaysia head of wealth and personal banking Renee Bullock-Cann told TMR.

She added that with Visa Instalments, HSBC Malaysia is empowering its card customers with another convenient and value-added payment service that helps them fit their purchases into their budgeting plans and allay the stress of making large or urgent purchases upfront.

Meanwhile, instalment payments are often used for small ticket items although the pandemic had shifted the categories where purchases are made.

Atome’s key verticals include beauty, fashion, travel, homeware and lifestyle. Lou-Walsh said the company’s average ticket size is between RM200 and RM400 where majority of the transactions are from smaller ticket items comprising day-to-day products such as beauty, fashion and lifestyle accessories.

“In order for the industry to be sustainable, responsible BNPL players need to look at ways to educate consumers on financial literacy and smart spending, ensure clear marketing guidelines and develop features that encourage responsible spending,” she added.

As for Hoolah, before the pandemic it saw instalment payments being used tremendously in the fashion and beauty categories. However, the work-from-home order had led to more purchases on furniture and household equipment, as well as working desks and home appliances.

Arvin noted Hoolah’s take on BNPL focuses on “Responsible Affordability” that allows customers to lead the lifestyles they want without falling into debt.

It actively ensures that users do not overuse the platform and consumers are required to pay off outstanding instalments when they hit the cap — before they can use the service to place a new order.

“When a customer cannot make a repayment on time, our first course is to get in touch with them immediately and understand why.

“There are times when life events can significantly impact a customer’s ability to pay, such as a change in employment or health condition, so we end up waiving a large number of late payment charges due to these legitimate reasons,” he added.