Is the BNPL market really booming?
BNPL faces consolidation due to rising rates, while growth continues in emerging markets.
The Buy Now, Pay Later (BNPL) market has experienced notable shifts in recent months, with consumer adoption remaining strong in Asia but facing consolidation due to high interest rates.
Anton Ruddenklau, Partner, Head of Payments at KPMG Asia Pacific, said that this trend has been a very thin margin game for the providers, who are suffering heavy losses with high interest rates and low user interest in the products.
He said that investment in BNPL providers has also decreased, with investors shifting funds toward other technology categories. This has led to reduced market expansion and fewer customers for BNPL providers.
However, despite the challenges in mature markets such as the UK, US, and Australia, growth is still evident in emerging markets. “Where we do see growth is in some of the more emerging markets– Philippines, Vietnam, Indonesia, Malaysia,” said Ruddenklau, highlighting that providers in these regions are targeting small-ticket products and services, which continue to drive adoption.
Ivan Grytsenko, Vice President at Billease, echoed this sentiment, pointing to the rapid growth of BNPL as a point-of-sale (POS) financing option, particularly among younger consumers.
Grytsenko explained that the demand for BNPL services is largely influenced by consumer preferences for convenience and flexibility, with Filipino consumers playing a major role. “60% of them say that they will most likely use the service in the next six to 12 months.”
Looking ahead, Ruddenklau sees potential market disruptions from new players, particularly wallet providers and banks entering the BNPL space. “Wallet providers and the banks are moving into the space pretty quickly,” he said. Additionally, increased regulation is likely as the market matures, with regulators focusing on the stability of BNPL firms.
Meanwhile, Grytsenko expects further expansion into non-traditional sectors like healthcare, education, and B2B transactions, opening up new revenue streams. “BNPL providers are starting to offer their services in non-traditional sectors like healthcare, education, and even B2B transactions,” he remarked.
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