How Hoolah fits into Shopback 2.0

Even months after Square bought Afterpay in a blockbuster acquisition, the buy now, pay later fever seems to remain at its peak.

Coming on the heels of countless deals in the past six months between BNPL firms, fintech players, and banks, news that BNPL platform Hoolah was set to be acquired shouldn’t have surprised anyone. Except that it did.

When the news broke earlier this month, perhaps the biggest curveball was the acquirer: Temasek-backed ShopBack, the Singapore-based cashback platform which banked US$40 million in funding just last month.

For Hoolah, the deal was timely: The startup had recently gone through a rough patch that involved staff cuts as part of a restructuring effort.

Heightened competition in the past year has squeezed margins for BNPL firms, while widespread lockdowns in Singapore and Malaysia over several months have also hurt offline spending.

BNPL can help ShopBack tap into the rising direct-to-consumer (D2C) ecommerce tide currently sweeping across much of Asia.

This allows the firm to reduce its reliance on major marketplaces like Shopee and Lazada, which have cut back on their partnerships with ShopBack in recent months.

Finding the right partner

By now, there is no longer any question about the utility of instalment payment services or the ability of BNPL firms to rapidly acquire merchants and users – usually millennials and Gen Z users.

“What BNPL does offer is an excellent route for accelerating customer acquisition, which businesses with a wide array of products can monetise” by packaging it with complementary services, analysts from UK equity research Redburn wrote in a recent report.

It’s the reason “everybody is either launching BNPL services [of their own] or acquiring one,” notes Varun Mittal, co-author of Singapore: The Fintech Nation.

On one end of the spectrum are full-stack BNPL companies like Klarna and Afterpay. On the other, there are companies like Grab and Shopee, which have added BNPL to their apps, Mittal notes. For the latter, BNPL is not a core service but an embedded feature.

As margins in the pay-later space thin out – and may shrink further – with increasing competition, only those that acquire more merchants and customers in the most markets as quickly and cheaply as possible will survive.

Pacing a bank

Why pair up?

ShopBack 2.0?

Evolve or be acquired