- Led Wayline
BNPL "Buy Now Pay Later" Will Become Singapore's Primary Payment Method in 2025
As the world continues to embrace e-wallets and digital payment platforms at a rapid pace, new alternative paying services are also appearing – the latest being “Buy Now, Pay Later” (BNPL).
According to the 2022 Global Payments Report that fintech software provider, FIS, was commissioned to produced, BNPL is projected to be the fastest-growing e-commerce payment in 2025 for Singapore.
Of course, this finding is not limited to the nation-state as the same report revealed that this major trend will also occur in other countries, like Argentina, Belgium, Brazil, Canada, Chile, France, Hong Kong, India, New Zealand, the United Kingdom and America.
This coincides with another key finding for BNPL from that report – it is projected to account for 1.6% (US$941 billion) in terms of transaction value for global point-of-sales (POS). Another report from Milieu Insights that came out last year – the Big Picture Report: Payments – revealed that an estimated 19% of the Singapore population aged 16 and above have tried BNPL, specifically on Hoolah and Atome platforms.
FIS also reported that, globally, BNPL is expected to be the payment method of choice as consumer payment preferences continue to shift towards digital payments. In fact, global consumers will continue to embrace BNPL and – by 2025 – it is projected to account for approximately 5.3% ($438 billion) of global e-commerce transaction value, increasing its share from 2.9% ($157 billion) in 2021.
Notably, credit cards and cash-on-delivery have lost market share and, combined, are projected to only account for less than a third of overall transactions within three years.
This is in line with current growth trajectories that global e-commerce spending is now experiencing. For 2021, its spending transaction value exceeded US$5.3 trillion and is projected to surpass US$8.3 trillion in 2025.
“Even as more customers return to the store, it is clear that there is no going back on the innovations we are seeing within fintech. Consumers are now mirroring the way they shop online while they are at their favourite retailer – creating a more advanced blend of digital and physical payment options,” said Jim Johnson, Head, Merchant Solutions, FIS.
It’s interesting to note that BNPL is still not fully regulated in many parts of Southeast Asia. To date, Singapore and Malaysia are now developing new guidelines to prevent “over-indebtedness” risks for BNPL users.
For the case of Singapore, The Paypers reported that there will be new guidelines coming out in the second half of 2022 to ensure BNPL will have a positive impact on the city-state. In the case of Malaysia, its Ministry of Finance is working closely with both the country’s Central Bank and Securities Commission to formulate a comprehensive legal framework that will regulate all consumer credit activities. A report from The Edge confirmed that this move is mostly focused on BNPL services and will be included in the soon-to-be enacted Consumer Credit Act.
FIS projected Singaporeans moving to BNPL payments by 2025
BNPL arrangements in Singapore emerged as a popular alternative to credit cards for consumers
Regulations are being developed to ensure BNPL is not widely abused