Asia-Pacific – With “Buy Now, Pay Later” becoming popular in the region, the latest report by financial services information provider GlobalData revealed that BNPL is projected to constitute 7.7% of all e-commerce transactions in the Asia Pacific region by 2028.
According to the report, BNPL accounted for 4.4% of e-commerce payments in 2023 in the APAC region and is further expected to increase to 5.4% in 2024. The said trend is also gaining traction in other APAC markets.
In Australia and New Zealand, it was noted that the two lead in adoption rates compared to their counterparts within the region. More specifically, BNPL solutions in Australia already accounted for an estimated 21.5% of total e-commerce payments in 2023, while in New Zealand, the figure was 11.9%.
Other Asian markets, such as Singapore, India, Indonesia, and Japan, are also rapidly adopting BNPL services.
Furthermore, the report also found that BNPL has a high growth potential in countries such as India, where credit card penetration is low and access to formal credit is limited. In fact, India has experienced the most rapid increase in BNPL share in the region, rising from 0.1% of e-commerce sales in 2019 to an estimated 5.8% in 2023.
Additionally, the expanding e-commerce market in India is positioned to fuel the rapid expansion of BNPL services, with FlipKart and Amazon offering pay-later services that allow users to purchase and pay in monthly installments.
Interestingly, concerns about BNPL’s potential to encourage impulse buying and lead to over-indebtedness have also emerged. To address this concern, it was indicated that central banks in the region are taking regulatory action.
For instance, New Zealand’s Minister of Commerce and Consumer Affairs proposed in November 2022 to regulate BNPL under the ‘Credit Contracts and Consumer Finance Act 2003’, which oversees traditional credit services such as credit cards and personal loans.
Under the proposed regulation, BNPL lenders will be required to assist borrowers in making informed decisions and help them with repayments in unforeseen circumstances, similar to other credit providers.
Borrowers will also be protected against excessive default fees, and BNPL providers would provide compensation to borrowers if any rules were breached. The regulation will become effective in September 2024.
Talking about the report, Shivani Gupta, senior banking and payments analyst at GlobalData, said, “BNPL payment solution is widely popular as an alternative payment option in the region, with large number of payments and fintech companies competing for a slice of this market. The increasing demand for this solution is supported by high consumer awareness, rising demand for short-term finance, especially among the millennials, and proliferation of BNPL service providers.”
