Buy now pay later (BNPL) has massive projected growth in the coming years. According to Juniper Research, the number of global BNPL users will surpass 900 million globally by 2027; increasing from 360 million in 2022. As consumers aim to purchase higher and higher value goods, aspirational products have suddenly become more accessible thanks to BNPL. Unsurprisingly, forward thinking merchants and online stores have started to trailblaze in their industries following this trend.
As compared to credit cards, this payment method seems to benefit smaller, mid-range retailers and their products the most. Businesses in these industries are not only benefitting from BNPL, but are also changing the financing landscape in the near future through consumer spending habits.
We will discuss the industries leading this economical revolution, how your online or retail business can benefit from this financing method regardless of industry and BNPL's future economical viability in this blog.
This blog rounds out our BNPL education series. In case you missed it or need a refresher, revisit our previous blogs introducing BNPL and comparing BNPL with credit cards.
Retailers, whether in-store or online, are experiencing the greatest gains from implementing BNPL payments. Businesses in fashion, cosmetics, lifestyle industries are finding that consumers are gravitating towards splitting payments for their products or services. Gone are the days where instalments are reserved for luxury goods; consumers find that utilising BNPL for essentials like rent, utilities or car insurance make it more manageable to sustain their fixed expenses.
This isn't to say that financing wish list purchases isn't financially viable. In fact, a study by PYMTS shows a considerable share of BNPL users are using it to finance clothing, travel and consumer electronics purchases, with a majority of these users being Gen Z or millennials. Hopefully, this provides some insight into customer spending habits and you can adjust your business strategies accordingly based on whether your customer profiles fit these categories.
Assuming your business can profit significantly from the implementation of BNPL payments and you've considered the financial viability of offering this payment option, there are still a few factors for you to consider before you move forward.
As with implementing any payment method, your store or online shop should have a versatile and holistic architecture for seamless BNPL payments and streamline the customer checkout experience. It is imperative you find partners like senangPay who can provide robust fintech support, such as compatible APIs web plugin integrations, customisable payment options, payment partner agreements, and reporting and analytic platforms.
Any financial service that you offer should come with robust security, for both your business and your consumers' financial safety. As such, your business should seek partners and platforms that can provide optimum security, like one that is PCI-DSS certified or enables tokenisation to encrypt sensitive data.
Not only should your store adhere to laws governing BNPL, but it's equally important to comply with laws surrounding data privacy, data residency, cybersecurity, and payment compliance. Be sure to also check that your payment provider partner has policies that also abide by these laws and regulations.
Despite ongoing challenges inhibiting the growth of BNPL, including high interest rates, tighter government oversight, growing economic uncertainty, and shifting investors' mindsets, consumers are still trending towards the convenience and flexibility of BNPL payments. As the Malaysian economic market seeks to penetrate the wider ASEAN area with an interoperable QR payment ecosystem, it's only a matter of time before BNPL and other relevant fintech catches up with this transnational adoption.
It's worth noting that a report by Worldpay states that while BNPL payments in the APAC region are still projected for a CAGR of 16% by 2027, the predominant payment method in Malaysia is still account-to-account (A2A) payments, with DuitNow QR being the leading payment facilitator. This is to say that, while BNPL still has incredible potential in the coming years, it's worthwhile to continue investing in other payment methods, especially e-wallet payments.
The immense growth of BNPL should not be overlooked. At the same time, it would be wise not to neglect other payment methods as it should supplement your existing repertoire of offerings rather than replace them. After all, customers have diverse preferences, and offering more payment methods like e-wallets, credit or debit cards, and FPX transfers will increase your reach and heighten the customer experience.
A holistic, well-equipped payment platform can enable your business to offer fast, safe and secure payments to all your customers. Book a demo with a senangPay specialist to start preparing your business to take advantage of upcoming e-commerce trends and stay ahead of your competition today.