Kuala Lumpur: Online payment platform Pace Now Enterprise Sdn Bhd recorded 75 times growth in monthly active shoppers, and 89 times growth in monthly transactions with a payment default rate of under 0.8 per cent for Pace users, well below industry standard in many markets, founder and chief executive officer Turochas Fuad said.
The Indonesia-born, Singapore-based businessman said the Buy Now, Pay Later (BNPL) payment solution is not new to the global payment landscape but it is a nascent but growing trend within Asia Pacific.
“This trend is mirrored in Malaysia, where the BNPL gross merchandise value (GMV) is estimated to increase from US$287.0 million in 2021 to reach US$6,588.3 million by 2028. In fact, Malaysia is also one of our fastest growing markets in terms of usage, demonstrating strong latent demand for BNPL,” he told Bernama.
He explained that demand is driven by both consumers and merchants, it unlocks financing for consumers and empowers users with financial flexibility. Merchants reap the benefits of a wider audience segment, incremental sales and increased basket sizes, without bearing any risk of payment defaults.
“To date, Pace has over 8,000 points-of-sale across Asia and is on track to meet its goal of one million users by the end-2022. Pace also aims to have an annualised GMV of US$1 billion by end-2022,” he added.
Commenting further, he said Malaysia is one of Pace’s largest markets and its strategic focus includes popular international brands at prime locations because they give a high degree of exposure to its BNPL solution due to shoppers density.
The Malaysian government has initiated a Consumer Credit Act (CCA) with the goal to strengthen credit consumer protection.
The CCA seeks to provide a comprehensive framework to regulate the conduct of entities providing credit or credit services to consumers, with an immediate focus on those not currently subject to direct regulation by any authority, which includes the regulation of credit card companies.
The CCA will pave the way for the Consumer Credit Oversight Board (CCOB) to be established as an independent competent authority to supervise consumer credit providers and credit service providers.
“This drives players to invest in product innovation, resulting in sophisticated solutions that advance the industry. The right regulations would also incentivise platform innovation, protect consumers from unsustainable spending, and support merchants in dispute resolution.
“The regulation also provides added assurance that BNPL is here to stay,” he said.
“In Singapore, Pace is already a member of the Singapore FinTech Association (SFA) BNPL Working Group, and we work closely with SFA to provide data and expertise to shape the BNPL framework,” he said.
On the perception that BNPL may entangle consumers in debt traps and worsen Malaysia’s household debt problem, he emphasised that BNPL allows consumers with limited access to traditional credit, such as younger Gen Z audiences or gig workers, to practise much-welcomed financial flexibility.
“While spending is in the hands of consumers, the onus is on BNPL players to foster responsible spending - (this is) something that must be embedded into the platform itself. At Pace, the key features to enable sustainable spending include our machine-learning algorithm which matches users to dynamic buy limits based on their profile, viewable in-app total expenditure, and regular payment reminders.
“These (features) help users to monitor spending and develop a responsible spending habit. As a result, the rate of default for Pace users is under 0.8 per cent, well below industry standard in many markets,” he said.
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