Why BNPL is booming in Southeast Asia | Asian Business Review
, Southeast Asia
191 views
Photo by Khairi Harry via Pexels

Why BNPL is booming in Southeast Asia

BNPL providers in the region now focus on strategic partnerships, business model innovation, and ecosystem development.

Buy Now Pay Later (BNPL) services have surged in Southeast Asia since its introduction in 2018, offering a flexible payment option for consumers, according to Euromonitor International.

BNPL enables consumers to defer payments and opt for installment-based repayment plans.

The report said that Southeast Asian countries such as Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, boasts significant potential for BNPL providers due to their large unbanked and underserved populations. 

With 76% and 67% unbanked populations in the Philippines and Indonesia respectively, and similar figures in Vietnam (47%), Malaysia (40%), and Thailand (25%), BNPL services offer an attractive proposition to fill this gap.

BNPL providers in Southeast Asia are leveraging strategic partnerships to expand their market presence. Collaborations with card operators, e-commerce platforms, digital wallets, and insurance companies have propelled BNPL services to new heights. For example, Atome Philippines' partnership with Mastercard and Traveloka PayLater's collaboration with Bank BRI and Visa have significantly broadened their user base and service usage.

To address challenges in revenue generation and profitability, BNPL business models have also undergone significant transformations. Implementing consumer charges and optimising repayment terms have emerged as strategies to enhance revenue streams and operational efficiency. 

Shortening installment periods and exploring alternative funding sources, such as acquiring banks or transitioning into digital banking operations, have also become imperative for long-term sustainability.

Meanwhile, the absence of well-defined regulations in emerging markets poses challenges for BNPL players, particularly concerning credit risk.

ALSO READ: Around 7 in 10 Gen Zs in Southeast Asia prefer e-commerce 

However, this environment also presents opportunities for growth, as BNPL gains traction amongst younger, unbanked, and underserved populations

“As a result, there is a strong likelihood that BNPL could emerge as the principal provider of financial products and services in these markets in the future,” the report said.

“By understanding these markets’ unique needs and preferences, BNPL players can position themselves as pioneers in shaping the financial landscape, fostering financial inclusion, and capitalising on the immense growth potential that emerges from these promising markets,” it added.

Follow the link for more news on

Join Asian Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

Chinese insurers deem it wise to move to alternative investments
Analysts see new regulations driving a conservative shift as insurers seek stability amidst volatile markets.
Insurance
Dharmais Cancer Hospital leads cancer treatment innovation in Indonesia
CEO Soeko Werdi Nindito Daroekoesoemo unveils advanced technology and seven flagship programmes for cancer treatment.
Is ‘Londonisation’ good for Asia’s M&A insurance market?
Industry experts dissect the region’s low usage rates for M&A insurance despite more industry players entering the field.
Blurring lines between online and offline retail in Asia Pacific
Foodpanda executive explains consistent service levels through efficient logistics and quality control measures.