Consumers Turn to BNPL for Flexibility and Transparency as Retailers Seize Opportunity

Three women shopping together in a clothing store in Japan

Malaysian consumers sentiment and actions continue to reflect the vagueness of the current COVID-19 crisis, and their goods and services purchasing behaviour is no exception.


The increasing needs and demands on payment flexibility for the consumers due to the current economic situation has contributed to the rising of Buy Now Pay Later (BNPL) service’s growing ability in Malaysia. Thanks to the flexibility and security it offers, many Malaysian consumers can now make predictable installments for their purchases without incurring interest and in certain cases, without affecting their credit score.


In fact, the BNPL solution has been integrated by large brands from various industries including fashion, retail, travel and more to offer flexible payment options to consumers looking to stretch their ringgit and avoid taking on additional long-​term debt.

The Statistics Worth A Thousand Words

Worldpay’s Global Payments Report 2020 indicates that BNPL services are fast becoming one of the most used services for online payment methods, and will account for over 24 % of international e-commerce transactions for physical goods by value by 2026. In fact, the BNPL market is expected to grow at a CAGR of 21.2 percent, with the APAC region leading the growth.



Due to an increase in Internet users, Asia Pacific is expected to be the fastest-growing area in this era. According to the e-Conomy SEA Report 2020, 40 million additional users entered Southeast Asia’s digital economy in 2020, increasing the overall number of Internet users in the area to 400 million.


Why Consumers Are Turning to BNPL

As consumer financing nowadays extends beyond installment loans and typical credit cards, BNPL also known as shop now, pay later, or POS financing, is one of the rapidly expanding digital payment trends accelerated by the COVID-19 outbreak.


Because of the financial challenges and rising income inequality caused by the pandemic, many consumers are seeking for flexible financing solutions, particularly interest-free ones, that could offer them a built-in way to budget their spending.


The BNPL service is offered to not just credit card holders but debit card holders as well. Having the ability to be granted with instant credit with a debit card is simply life changing for Malaysian consumers.

increase conversion

With BNPL, all transaction details and payment schedule are transparent and easily accessible for the consumers. It is a payment option that lets them know upfront exactly what they are going to pay, when they need to pay and how it can fit their budget. 


Compared to using credit cards, consumers are less informed of the payment schedule and the additional fees they are being charged with, indicating the lack of payment transparency. The more awareness a payment process requires, the greater are the payment transparency to the consumers.



In line with the shift in consumers buying behaviour, more businesses are turning to alternative payment solutions allowing their customers to spread the total cost of their purchase into smaller interest-free payments over a period. 


For many retailers who are struggling to stay afloat, the BNPL service extends a vital support with benefits to help them sustain their businesses.



The following are some of the reasons why retailers are integrating Buy Now Pay Later service into their businesses’ customer journey:

instant approval

1. Increased conversion

BNPL service can help retailers to increase sales conversion and reduce abandoned cart rates. 75% of all shopping carts are usually abandoned. These conversion rates are improved by BNPL.


2. Larger consumer base

By integrating BNPL payment option into their business, retailers can make purchases a lot more convenient and affordable for their customers. 


As the BNPL service can now be offered to not just credit card holders but debit card holders as well, this enables the merchants to reach larger consumer base.

3. Repeat sales

BNPL cultivates long-term relationships with consumers who return for more. Studies show that users who utilise the shop now, pay later service make an average of nine purchases per year.

4. Pay online or in-store

Whether the retailers are running an online or brick-and-mortar store, consumers can pay easily with BNPL service or point-of-sale (POS) terminal.


5. Enhanced customer experience

Providing flexible payment systems and financing options is one way to empower the consumers as they get more choice. They simply experience less friction in their buying process where they don’t have to wait, miss out, or awkwardly discover they don’t have enough money for their items at the checkout.

To Put It in a Nutshell

As the economic uncertainty grew, it seems many consumers are more comfortable purchasing essential items when they have the option to make smaller payments over time without adding to their credit card debt. 


As consumers inclinations transform with market changes, retailers who embrace shifting expectations have the greater tendency to reap rewards in the form of increased sales and new customer conversions. 


To sustain future success, retailers need to embrace the variety of consumer needs in the likes of checkout options and highlight optionality.