Buy Now Pay Later - The future of retail payment?

Live: Buy Now, Pay Later - The future of e-commerce spending?

Insta, a branch of Amigo Fintech, last month started cooperation with Viettel Digital Services to become the newest player in the buy now, pay later (BNPL) race.

The mini app on Viettel Money combines an e-commerce platform and a payment feature allowing users to split the payment into four periods with zero interest.

KMS Technology, a Vietnamese tech group, has also just enrolled as a new market entrant through its platform KayPay. “Although Vietnam was a bit late to the party, it will speed up quickly when it catches up with the trend. Within the next three years, BNPL will become a popular form of payment,” said KayPay CEO Le Tran Bao Duy.

Meanwhile, Kredivo, an Indonesian digital credit platform, has become Sendo’s official BNPL service provider partner. It partnered with VietCredit to launch in Vietnam in August, and since then, it has been slowly rolling out several service packages to the public.

“We’ve spent over a year cultivating our team and learning the ropes of the business, and now we have 50 sales partners and are well on our way to 100, mostly in Hanoi and Ho Chi Minh City,” said Krishnadas Mohandas, senior vice president of business development at Kredivo.

According to a recent analysis by the Research and Markets website, BNPL payments in Vietnam are projected to increase by 126 per cent annually to $1.12 billion by 2022. The adoption of such payments is anticipated to increase at a compound annual rate of 45 per cent from now until 2028.

Currently, in the BNPL market, there are two main groups of players. The first consists of big financial companies with the advantage of financial resources and a customer base, including KMS Technology, Lotte Finance, and Fundiin. However, BNPL is typically not their main product, hence there is a limited investment. The second group, companies specialising in BNPL solutions such as Kredivo or Atome, is generally dominating the market.

Michal Skalicky, chief customer officer of HomeCredit Vietnam, believes that this segment still remains in its infancy, but young and digital-savvy customers are ready to embrace it.

“This concept is difficult to implement technologically since it requires full digitalisation of many procedures. As the competition heats up, we anticipate a sizable growth opportunity in this industry,” Skalicky said. “Tiki is our first e-commerce platform partner for Home PayLater, but we also have plans to reach out to brick-and-mortar retailers.”

According to Nguyen Anh Cuong, co-founder and CEO of Fundiin, there are two reasons why Vietnam’s BNPL market has emerged later than other countries.

“As Fundiin raises funds for our BNPL model, I always get questions on avoiding bad debt. It’s not surprising, because bad debt has been a common problem of Vietnam’s consumer loan segment,” Cuong said. “So it’s not that Vietnamese entrepreneurs did not see BNPL’s potential in the past, but the market was not yet ready, especially in terms of credit history data.”

Kent Wong, head of banking and capital markets at VCI Legal, told VIR, “Although BNPL is a good payment option for people to access credit without a history and for emergency things, there is a risk of a slippery slope of debt, especially for those not fiscally responsible in personal finances or those who fall on hard times, such as with losing a job or getting sick.”

“If you miss an instalment payment, there are consequences like late fees or high-interest charges. It can also make spending feel too easy, and people may overspend.”

Meanwhile, Duy of KayPay also noted that the platform does not portray itself as a bank or lender but rather as a firm that improves the shopping experience.

“We facilitate a safe and secure purchasing experience for users. Business partners guarantee the integrity of the products sold, and consumers can pay without undue financial hardship,” he said. “To assist consumers in avoiding becoming stuck in a never-ending cycle of debt, KayPay will provide several options for taking a more leisurely payment path than normal, along with a fair and transparent support charge schedule.

At the Buy Now, Pay Later - The future of e-commerce spending? talk show, organised by Vietnam Investment Review, experts will discuss the growth potential of BNPL options in Vietnam, benefits and challenges awaiting credit institutions, platform providers and e-commerce platforms, as well as possible solutions and directions from legislative agencies.

The talk show will be livestreamed on VIR publications’ website and fanpage platforms including: vir.com.vn, baodautu.vn and tinnhanhchungkhoan.vn

Speakers include:

Nguyen An Son – Head of Project Development Department, Centre for Informatics and Digital Technology, Department of E-commerce and Digital Economy (iDEA), Ministry of Industry and Trade

Le Van Duong – Partner, Indochine Counsel

Michal Skalicky – Chief customer office, Home Credit Vietnam

Nguyen Anh Cuong – Co-founder & CEO, Fundiin

Lu Duy Nguyen – Senior director at Tiki Corporation

The trend of buy now, pay later solutions is projected to gain traction in Vietnam with many players unveiling new services to tap into this fast-growing segment.

The burgeoning e-commerce penetration amid the pandemic is paving the way for ‘buy now, pay later’ options to gain traction in Vietnam, particularly targeting those with insufficient credit history.

Lotte Finance Vietnam has officially launched a brand new consumer finance service called PayLater by Lotte Finance to capture the lucrative "buy now, pay later" segment in the country.

Home PayLater – a digital financial product with a VND200 billion ($8.7 million) investment – is set to enhance the convenience of consumers’ online shopping experiences.

Buy now, pay later is often an interest-free way for consumers to defer payments on purchases. For retailers that subsidise the offering, it is a way to encourage conversion and higher average ticket sizes.