Buy Now, Pay Later: An Alternative Payment Method

In recent years, the “buy now pay later” (BNPL) trend has gained significant traction, especially among millennials and Gen Z. BNPL allows consumers to purchase goods and services and defer payment, usually interest-free, for a later date. This option has become increasingly popular as it offers flexibility and convenience, especially for those who may not have the financial means to pay for a product upfront.

How does BNPL work and what are the benefits of using one in our daily life? Let’s dive deep into it.

What is BNPL?

BNPL systems enable you to make purchases by dividing the price into regular payments, typically at 0% interest. On the other hand, certain platforms allow you to postpone the transaction until the end of the current month or the coming months. The caveat is that if you don’t make the payment on time, they might charge you late fees.

When making purchases, customers have a variety of flexible payment options on BNPL platforms. You have the option to use a BNPL platform as a payment option when purchasing goods from a participating retailer. Some situations could call for a down payment, which is typically the first month’s instalment of the total purchase price. According to the terms and conditions of the BNPL platform, the remaining debt can then be paid off in regular monthly instalments that may or may not contain interest. In recent years, this practical method of payment has grown in popularity, especially among younger customers who value its simplicity and adaptability. When utilising BNPL services, it is crucial to be aware of the terms and conditions, prospective interest fees, and the effect on your credit score.

Benefits of BNPL

• Instalments with 0% interest. On your purchases, most BNPL platforms charge 0% interest. This implies that unless you miss a payment, you will not be liable for any interest or fees.
• Possibility of qualification without a high credit score. You’d need, uh, a credit card to apply for a 0% APR instalment loan. And you would need a respectable credit score to obtain one. However, some BNPL platforms might not do credit checks, so even if your credit score is low, you could still take out an instalment loan with them.
• Divide large purchases into smaller payments. If you need to make a big purchase but want to split it up into several instalments to avoid straining your monthly budget, BNPL may be helpful. For instance, instead of using up all of your emergency savings, you may divide an RM3,000 replacement laptop cost into three RM1,000 monthly instalments. This provides you with some money cushion in case this month brings along another monetary emergency.

Disadvantages of BNPL

• Substantial late fees. If you are unable to make your instalment payment, most BNPL platforms may charge you a fee. It might be more expensive to do this than to use a credit card, depending on the platform.
• May lead to increased spending. If you had to pay for something in full or if you hadn’t budgeted for it, you might not be able to afford it. However, BNPL platforms make it simpler to purchase items. This can be helpful for goods you need, but it also makes it simpler to spend money on impulsive or pointless purchases.
• Missing payments could lower your credit score. Some platforms might notify credit reporting agencies about your late payments, which could lower your credit score.

Top 5 BNPL Services In Malaysia :

#1 Atome

One of the largest BNPL platforms in Malaysia, Atome has more than 2,000 retailers affiliated with it. For individuals without credit cards, Atome’s purchasing limit is RM1,500; for those with credit cards, it is RM5,000.

Payment terms are three months, and each late payment will incur an RM30 cost. To use the Atome service, users have to be at least 18 years old and complete a single transaction of at least RM10.

#2 FavePay Later

Customers can divide their payments on FavePay purchases into instalments with the help of the BNPL service provided by FavePay Later. Additionally, customers of FavePay receive up to 10% cash back on each purchase. Payment is required three months after the shopping limit has been granted, and the limit is determined by user ratings.

In Singapore and Malaysia, all Fave merchants provide the BNPL service FavePay Later. That is 40,000 more than stores, which include well-known names like Marks & Spencer and Pandora. You will also be charged 1.5% of the entire amount due for each late payment if you are unable to make your repayments.

#3 Hoolah

Hoolah works with a number of well-known retailers. Like Fave, Hoolah offers a three-month repayment term and bases its shopping limit on user ratings. 

Its late fees are, however, rather expensive. If your purchase total is RM500 or more, you risk being fined RM75 each late payment, with a cap of RM150 per purchase.

#4 Grab PayLater

Users of the Grab Paylater service have two payment options: either they can pay in four monthly instalments (PayLater) or in whole at the end of the following month (PayLater Postpaid). PayLater allows you to pay for groceries, food, e-hailing services, and other purchases as well as items from Grab’s affiliated stores, such as Lilit, and Zalora.

Only the Grab services—Grab rides, GrabFood delivery, and GrabExpress delivery—are compatible with PayLater Postpaid. Additionally, choosing this choice will grant you GrabRewards points. To be eligible for Grab Paylater, a user must be over 21, a member of the silver tier, and have completed three transactions on the app within the preceding month.

#5 SPaylater

Beginning in 2021, SPayLater was launched as Shopee’s foray into the BNPL sector. Two repayment alternatives are offered by the BNPL service. You have the option of paying the entire amount in zero-fee instalments at the end of the month or delaying payment for two, three, or six months.

The processing fee for clients who select the instalment plan is 1.25 percent of the total purchase price due each month. For payments received after the due date, SPayLater charges a penalty fee of 1.5% each calendar month of the past-due sum.

Mind your choice

In conclusion, platforms that let customers buy now and pay later (BNPL) have grown in popularity, especially among younger generations. When utilising BNPL services, it is crucial to be aware of the terms and conditions, prospective interest fees, and the effect on your credit score. It’s crucial to utilise BNPL sensibly and only when necessary because, if used improperly, it can be simple to get caught in a vicious cycle of debt. Overall, BNPL can be a helpful tool for managing your finances, but in order to prevent any financial hazards, it’s critical to fully comprehend its implications and utilise it wisely.