The news: Splitit and Fave expanded buy now, pay later (BNPL) solutions into new markets to capture growing global demand for flexible payment solutions.
- Splitit partnered with UAE-based BNPL provider tabby. tabby will integrate Splitit’s card-based installment lending product via a white-label solution so tabby’s merchants can offer installments on credit cards that can be paid each month. Because Spilitit’s solution uses existing limits on consumers’ credit cards, which are typically larger than tabby’s SR5,000 ($1,333) credit limit, the tie-up will help tabby expand its BNPL solution to high-dollar spending categories.
- Singapore-based fintech Fave launched a BNPL pilot in Southeast Asia. The service, dubbed FavePay Later, lets customers in Malaysia and Singapore—where ecommerce sales are expected to reach a combined value of $10.87 billion this year, per our forecasts—pay for purchases at more than 40,000 online stores. The app-based solution lets users pay for purchases in three interest-free monthly installments.
How we got here: The share of global ecommerce transactions made using a BNPL service grew 31.3% year over year (YoY) in 2020, per Worldpay from FIS.
- The pandemic drove many consumers to BNPL solutions. COVID-19 increased financial insecurity for many and prompted people to avoid debt—paving the way for BNPL solutions, which offer payment flexibility but with less perceived risk. It’s especially useful for consumers who either don’t have access to a credit card or want to avoid interest rates.
- Providers deepened their reach via global expansion and new partnerships to capitalize on BNPL demand. Many providers, including Klarna and Afterpay, moved into new markets to take advantage of the demand boom—which may explain Fave’s expansion further into Southeast Asia. And like Splitit’s recent move, providers also inked new deals to bring their solutions to more merchants and customers: Affirm partnered with Shopify to power Shop Pay installments, and Afterpay formed a tie-up with Stripe.
The big picture: Global expansion lets providers reach new customers who may have a need or an appetite for BNPL solutions. With post-pandemic recovery and subsequent financial recovery, occurring unevenly around the world, financial insecurity may still be high in some markets—making BNPL an attractive solution.
But even after the pandemic subsides, BNPL will likely still see global uptake: The share of global ecommerce transactions made using a BNPL service is set to double by 2024. This may be the result of sticky consumer payment habits picked up during the pandemic, as well as consumers finding value in non-credit-card payment solutions, especially as they expand beyond retail and into sectors like travel and business services.