Micro loans are Asia’s hottest fintech products as Gen Z and millennial online shoppers prefer to buy now, pay later

Buy now, pay later (BNPL) services may double their share of Asia’s e-commerce payments market from 0.6 per cent to 1.3 per cent, according to forecasts

Chinese fintech firms have invested in Southeast Asia’s BNPL services: Ant Group owns 6.3 per cent of India’s Paytm and 39 per cent of South Korea’s Kakao Pay

Reading Time:6 minutes

Published: 7:30am, 4 Dec 2021Updated: 4:35pm, 6 Dec 2021

For Marcus Khoo, perfumes and oil diffusers were never high on his shopping list. They would have sat idling in his online shopping cart, were it not for a hire-purchase instalment payment option that tipped the balance in his decision.

Using a service called Rely, Khoo divided his S$56 (US$41) shopping bill into four fortnightly instalments, free of interest. The Singapore-based start-up, founded in 2016, plugs into dozens of stores that sell fashion, accessories and electronics, including the shoe brand Geox and the clothing brand Charles & Keith.

“I like it because you pay less for the item at the start and there is no interest, unlike a credit card,” said Khoo, a 26-year-old social media executive who has used the option three times this year. “You still pay the full price, except it is split across different time periods. The pain of your money departing from your wallet is delayed, compared to paying it off in one shot.”

Rely is one of dozens of hire-purchase credit providers – known by their Gen Z acronyms BNPL for “buy now, pay later” – that are sprouting up all over Asia, poised to double their share of the region’s e-commerce payments market from 0.6 per cent to 1.3 per cent, according to a forecast by the FIS-Worldpay Global Payments Report 2021.

A screen shot of Rely, a smartphone application that offers buy-now-pay-later (BNPL) consumer credit to shoppers on June 6, 2021. Photo: Bloomberg

It is the fastest-growing online payment method in countries including Australia, Japan, Malaysia and Singapore, according to the report, at the expense of credit cards, bank transfers, cash on delivery and prepaid cards, all of which will lose share through 2024.

China’s online shoppers have long been accustomed to what is also known as microloans, small sums of credit powered by artificial intelligence (AI) and big data analysis. Ant Group, an affiliate of this newspaper’s owner Alibaba Group Holding, has been operating its Huabei service since 2014 – while rival JD.com launched Baitiao in the same year.

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