Buy now pay later (BNPL) has emerged as a viable credit option for e-commerce purchases in Asia-Pacific (APAC) as several payment companies are now offering this service in the region.
An analysis of GlobalData’s e-commerce analytics reveals that the APAC e-commerce market is set to grow at a compound annual growth rate of 17.6% from $1.2 trillion in 2016 to $3.6 trillion in 2023.
“The COVID-19 pandemic has not only adversely affected businesses but also consumers’ disposable income. As a result, with rise in demand for consumer financing and growing e-commerce sales buy now and pay later service has emerged as a major short-term borrowing tool for consumers,” explains Ravi Sharma, Lead Banking and Payments Analyst at GlobalData.
“BNPL provides consumers with the flexibility to pay for their purchases at later dates. In addition, unlike traditional credit cards or consumer loans, there is no fee if payments are made on time.”
Several BNPL solutions in the region have thrived during the pandemic. For instance, Australia-based BNPL solution provider Afterpay has reported global sales of $10.1 billion in the first half of fiscal year ended 31 December 2020, a year-on-year 112% growth. It also added nearly 23,000 new customers daily to its platform in the same period.
BNPL is very popular in Australia with 5.8 million accounts. The entry of global players like Klarna further fostered growth in the country. Other Asian markets like China and India have also registered similar trend.
In countries like India, where there is low credit card penetration and limited access to formal credit, BNPL has huge potential for companies like LazyPay, which offers pay later option across 250 merchant websites and apps. In addition, leading online retailer Amazon introduced its own deferred payment solution in April 2020.
“With consumer spending on the rise, BNPL concept presents a huge potential in the APAC region and has the potential to challenge the existing credit models,” concludes Sharma.
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