Retailers Taking to BNPL Platforms

The Covid-19 pandemic has contributed to the development of “Buy Now, Pay Later” (BNPL) segment in Malaysia, as retailers who have been impacted by long lockdowns turned to BNPL as means to connect with the digital-savvy consumers. BNPL services in Malaysia are still currently in their infancy compared to countries like Singapore and China, but there is an anticipation that the country’s market share will grow more than double by 2024 based on FIS-Global Worldpay’s Payments Report. Key BNPL players in Malaysia include PineLabs, Atome, myIOU, Hoolah, and PayLater by Grab.
Pine Labs Pte Ltd, one of Asia’s leading merchant commerce platforms and a Singapore-based BNPL provider stated the BNPL penetration is very low on the e-commerce site and will at least account for 5% to 10% of total e-commerce transaction value in the next five years. But overall, the segment is anticipated to rise steeply in the Southeast Asia region at a 15% and 20% CAGR within the coming decade. Based on its data, around 70% to 80% of Malaysian BNPL users are between the ages of 25 and 50. The majority in this age group does not have a credit card and BNPL players have ventured into areas where banks do not normally specialize such as fashion and cosmetics thus increasing the tendency to utilize BNPL.
One of the other well-known BNPL platforms in Malaysia is Atome, which is part of Advance Intelligence Group, a Series-C AI-driven technology company headquartered in Singapore and has entered Malaysia during the final quarter of 2020. Pine Labs also collaborated with Atome to broaden the reception of BNPL in the country. Between February to August 2021, Atome’s order volume has increased by 100 times and its merchant network has grown five times. The company’s general manager Trasy Lou-Walsh stated around 95% of their orders came from online channels such as retailers’ e-commerce websites or mobile applications. Atome has the largest merchant network in Malaysia, with over 500 merchants using their payment checkout solution in their stores and websites.
With Atome, customers can divide their bills into three equal interest-free payments over three months. Walsh noted that the use of digital wallets and contact payment have been among the preferred methods among the locals. These consumers are observed to cherish the ability to stretch their budget and manage their expenditure. Atome’s top-ranking products are mainly from beauty, fashion, travel, homeware, and lifestyle segments, with an average ticket size between MYR 200 (USD 48.35) and MYR 400 (USD 96.70), as opposed to standard installment plans, which can cost thousands of Ringgit.
By adding Atome as one of the payment checkout options, retailers have seen an average of 17% increase in ticket purchase size and some Malaysian retailers such as Love18C reported a 30% increase in conversion. By the end of 2021, Atome wants to have a 10-fold expansion in its Malaysian retail and customer base. It also plans to increase its workforce and expand across all major cities in Malaysia. Furthermore, Pine Labs’ BNPL platform has already been adopted by top merchants and banks such as CIMB Bank, AmBank, HSBC Bank, and RHB Bank in Malaysia and it will partner with another six or seven banks, as well as three or four more BNPL providers. Pine Labs is also considering issuing an initial public offering in the next 12 to 18 months.
(Sources: The Edge Markets; The Star Online; Buro247)