Tristan Chiappini

Opinion | How pandemic-weary young people are embracing ‘live now, pay later’ finance solutions

An evolution from ‘buy now, pay later’, the payment system offers the youth of today a way to unlock intangible services like travel, healthcare and lifestyle experiences now, and worry about the cost later

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Pedestrians walk past a shopping mall in Singapore on June 6, 2021. Digital lending is expected to reach US$92 billion in transactions in Southeast Asia alone by 2025. Photo: Bloomberg

Tristan Chiappini

Published: 10:15am, 12 Jun 2022

The concept of consumer credit at the point of sale has existed for many years, from merchant loans to bank lending and credit cards. There have been further evolutions in recent years to the way consumer credit is offered and structured, largely transformed by the advent of big data, digital identities and smartphones.

Technology like this enables fintech companies to easily gather customer profiles and user behaviour, giving them the ability to approve loans in just a few seconds. The result is that nonbank credit providers have become more competitive than ever.

“Buy now, pay later” (BNPL) is a short-term finance solution which enables consumers to pay for goods and services in instalments. With firms such as Klarna marketing to young people, the service has quickly become commonplace as a way to keep up with peers and access the latest trends in an instant.

Digital lending is expected to reach US$92 billion in transactions in Southeast Asia alone by 2025. In Singapore, the government has recognised the growth of BNPL in neighbouring markets, and the Singapore FinTech Association has launched a working group to develop a code of conduct for providers. This signals increasing regulatory attention and the potential for the payment method to gain further ground.

Following Klarna’s success, other fintech companies are adding instalment financing into their payment mix. BNPL is becoming a popular payment method across the globe, with firms such as Atome, hoolah, Rely and Grab getting in on the act.

It is no secret that the onset of the Covid-19 pandemic brought a decline in consumer spending worldwide. Even before that, though, BNPL served as a budgeting tool for consumers, helping them delay payments and spread costs. The shift to e-commerce created the perfect environment for it to thrive online.