These past few years have seen the exponential growth of the buy now, pay later (BNPL) arrangements, a trend that’s been fueled by the accelerated digital shift, and the surge in e-commerce activity. Now, that burgeoning industry is showing no signs of slowing down. This could push penetration to 4% of retail e-commerce versus just 1.6% in 2020, indicating that although BNPL options still account for a tiny portion of e-commerce sales, adoption is rising at a fast pace and that the growth opportunities are meaningful. BNPL is the new trend that we are seeing across the globe, and it is becoming very mainstream. For consumers, the appeal of BNPL arrangements is obvious: users are able to buy what they need without having to shell out the entire cost upfront, and instead, pay in installments over a certain period of time.
These payment options are designed to be super convenient with streamlined sign-up and checkout processes to minimize friction. In Southeast Asia, where smartphone penetration is high and the population young, providing superior digital-first experiences has become an imperative for merchants. For merchants, benefits are also there and include higher conversion, higher basket size, and access to hyper-targeted marketing capabilities which allow them to reach the right consumers. By leveraging the huge amount of data, they collect from customers, BNPL providers can not only give merchants the ability to run marketing campaigns that are more effective, but they also help customers to filter through the noise, really focusing on proposing the products that they like, increasing customer satisfaction. All in all, these providers are reinventing online commerce by connecting frictionless payments with the online shopping experience.