‘Buy now, pay later’ heats up in Singapore with Grab, Mastercard entering the scene

Unless you deliberately avoided shopping throughout the festive season, you probably came across “buy now, pay later” (BNPL) offers at some point or another: on a splashy newspaper spread, lining cashier counters, or even on an Instagram livestream.

The fintech trend that lets shoppers pay in interest-free installments is seemingly taking Asia by storm.

Singapore, with an internet economy poised to grow to US$22 billion by 2025, has drawn the interest of several BNPL firms, and more regional players are set to launch their services in the city-state.

Image credit: Siddharth Bishnu

Together with payments giant Mastercard, Pine Labs – the India-based fintech player that already offers its pay-later service in India and Malaysia – will launch in five new Southeast Asian markets including Singapore by “early” this year.

Super app Grab, which has been releasing a laundry list of financial services including insurance, banking, and lending, quietly added its own pay-later service to the mix late last year.

While the model first started out in countries such as Sweden – home to BNPL pioneer Klarna and where more people own debit than credit cards – the trend is picking up steam across the world.

The service is bucking the trend in Singapore where three-quarters of the population own a credit card.

See: Why the time is ripe for ‘buy now, pay later’ in Asia

Singapore-based BNPL firm Hoolah says total transactions processed on its platform grew over 700% from the beginning to the end of 2020.

Other local players have seen similar growth: Since launching in July last year, OctiFi says total transactions processed on the platform have grown over 40% month on month, while Rely says it grew “more than 8x” last year on a gross merchandise value basis.

“Among the younger generation, more people are doing freelance work, so they don’t necessarily have a salary employment, which is very important for them to get access to a credit card. We’re also seeing a trend among millennials and the Gen Z population who are avoiding credit cards overall,” observes OctiFi CEO Ed Chin.

Friend or foe?

In both good times and bad, shoppers are more likely to buy from a store that they already frequent if these shops offer an interest-free installment option. In other words, it matters which merchants BNPL players work with and how many.

This explains why many players that have grown by targeting ecommerce are opting for an omnichannel approach.

Scaling through ecommerce (or not)

Still not mainstream

The sky’s the limit