APAC BNPL Gross Merchandise Value is expected to exceed US$782 billion by 2028

The BNPL payment industry in Asia Pacific has recorded strong growth over the last four quarters, supported by increased eCommerce penetration along with the impact of economic slowdown due to disruption caused by Covid-19 outbreak.

According to ResearchAndMarkets.com, BNPL payments in the region are expected to grow by 45.3% on an annual basis to reach US$201.9 billion in 2022.

Medium to long term growth story of BNPL industry in Asia Pacific remains strong. BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 25.3% during 2022-2028. The BNPL Gross Merchandise Value in the region will increase from US$139.0 billion in 2021 to reach US$782.9 billion by 2028.

The Asia-Pacific region’s buy now, pay later (BNPL) market had strong growth over the previous four to six quarters. The top BNPL companies in the world are based in Asia. Singapore, Indonesia, Malaysia, Australia, India, and China all saw high demand for BNPL payment methods.

Australian consumers have been one of the early adopters of the buy now pay later (BNPL) payment method globally. The explosion in the popularity of the BNPL payment method during the global pandemic outbreak has seen many traditional financial services firms, including banks, rapidly move into the BNPL space, either in collaboration with established BNPL providers or introducing their deferred payment service, despite initial hesitancy and skepticism about these payment arrangements.

Recent moves by BNPL providers, such as Afterpay, also indicate where the next growth phase of the BNPL industry may come from. The Australia-based firm, which Square has acquired, is making inroads in the physical retail segment by integrating the BNPL payment method with in-store point of sale solutions offered by Square.

BNPL providers are expanding their services into new product categories to drive growth amid rising competition

Amid the growing competition in the Australian BNPL industry, firms are expanding their services into new product categories to gain more traction among consumers and drive growth. For instance,

• In March 2022, Fupay, the Australian fintech firm, announced that it is expanding BNPL products to petrol and groceries. After expanding into rent in 2021, the domestic BNPL player announced new partnerships in the fuel and grocery sector with United Petroleum, IGA Marketplace, and Foodworks. This move comes amid an expansion in payments services across the board, as emerging Fintech firms continue to compete and challenge the big banks.

Along with new BNPL players, established global giants such as Afterpay are also launching the service across different segments. For instance:

• In March 2022, Afterpay announced that the firm had entered into a strategic collaboration with DoorDash, one of the leading global food delivery platforms. Under the strategic alliance, DoorDash customers can use the BNPL service offered by Afterpay while ordering food from the aggregator.

The publisher expects the trend to grow further as players seek to expand their services into more product categories amid the growing competition in the Australian BNPL market.

The high growth potential offered by the Chinese market is also attracting foreign investors to enter the industry. Some leading global BNPL players, such as Afterpay and Klarna, have invested in the Chinese BNPL sector. Afterpay, for instance, invested in domestic local BNPL firm Happay, whereas, Klarna established a subsidiary in China. Regional players, such as Atome, are also expanding their footprint in the Chinese market by launching services for Tier I and II cities. Over the next three to four years, the publisher expects more global BNPL players to enter the Chinese market.

In recent years, e-commerce transaction volume has surged significantly due to the global pandemic outbreak. This meant that the BNPL industry flourished. In China, not just the domestic e-commerce market is growing, but cross-border e-commerce has also surged significantly over the last few years. This is creating new potential for domestic BNPL enterprises to expand internationally, especially in conjunction with the Chinese government’s Belt and Road Initiative. For instance,

• Okebeli, the Chinese BNPL player, became the first in the sector to go overseas with its deferred payment service. In 2021, the firm partnered with merchants in Indonesia, allowing consumers in the Southeast Asian market to make purchases using an interest-free installment payment service. In Indonesia, the coverage rate of its stores has exceeded 60%.
• In 2022, the firm is planning to further strengthen its position in the Indonesian market, where the demand for the BNPL payment method has steadily risen over the two years. From a short- to medium-term view, the company also intends to boost R&D spending and grow into numerous additional Southeast Asian regions.

With the BNPL market expected to grow strongly across the Asia-Pacific region, ResearchAndMarkets.com expects more Chinese firms to expand their services in the region over the next three to four years.