The onset of the Covid-19 pandemic accelerated Singapore’s transition to an increasingly cashless society, and even with measures largely lifted to return life to normal, it is still common to see more online payment options offered in stores, such as scan-to-pay QR codes and digital wallets.
Electronic payment has undeniably become the new norm, and as more and more people go cashless, consumer and data analysis shows us that cash usage has declined with additional data indicating that 41%, or nearly half, of Singapore’s population now use this method as their means of payment. Additionally, the “Buy Now, Pay Later” (BNPL) choice is gaining traction among consumers, with usage increasing from 4% to 9% over the same period.
With the introduction of the BNPL alongside the rise of electronic transactions, payment is now fast, efficient and transparent. The BNPL program is also convenient: make a purchase now and you can pay it back another time, perhaps even in a few installments at fixed intervals – without additional interest.
However, criticism surrounding the BNPL stems from concern that it is secretly paving the way for a negative shift in consumer attitudes: are consumers now more likely to overspend? Prime Time’s Bharati Jagdish speaks with Bryan Quek, Managing Director of Atome Singapore to find out more.
Bharati Jagdish: How has all of this helped your business and your income since the pandemic hit?
Bryan Quek: Without a doubt, we’ve had tremendous growth at Atom – and we’re only about two and a half years old. Over the last year and a half, with the pandemic hitting, we have seen an increase in the number of GMVs and transactions we have. Regionally, Atome is present in 10 markets across Asia. We have around 15,000 merchant partners; and these partner merchants see the growing demand for Buy Now, Pay Later (BNPL) and plan to offer it as a payment solution to their customers.
When choosing a payment method for a purchase, maximizing the return is a priority, even more so than convenience. Although this is a fairly young category, many BNPL providers offer promotions, discounts and rewards programs. They are inherently mobile and it seems like Singaporeans could turn to these offers to maximize their return on spending.
Bharati: We see a lot of criticism on the BNPL program, especially with the danger of overspending, analysts are worried especially about Gen Z. They say the attitude is ‘Buy now, worry later’ .
Bryan: The way a “Buy now, pay later” makes money would be to charge merchants a fee for the service to provide. This is different from the traditional credit card, where there are fees but there are also interest charges charged to consumers who fail to repay. So if you look at how BNPL makes money, we won’t make any money at all if the consumer is unable to pay us even on the next payment.
It is in our interest to ensure that consumers are able to repay on time. We only charge a small fee if the consumer is unable to do so. This is a fixed fee not based on percentage terms. This is why I have the impression that there are concerns in the market. I think the BNPL actually has a vested interest in making sure our consumers are spending wisely.
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Bharati: Would showing that Atom has a vested interest work? It looks like you don’t control consumers like credit card companies and banks do.
Bryan: We don’t. Atome’s partner merchants specifically target the Gen Z population, as they seek convenient and fast-moving services. At Atome, we offer a small amount to consumers to make their purchases, and as they purchase additional hours, we increase the amount they can spend with merchants on our platform.
Bharati: Just like banks before granting a loan, how do you ensure that the people who buy actually have the means to pay?
Bryan: We currently use a KYC (Know Your Customer) system, in which Atome relies on the services of other companies to understand who our user is and the credit limit we can assign to them for payments. Currently, less than 1% of users in Singapore miss their payment; this shows that the system is working and that it ensures that most users are able to pay their fees on time, even if their payments have been split into three.
Bharati: The fact is that with each BNPL payer controlling their payments, the Consumers Association of Singapore recently called for stronger protection in the form of purchase limits and penalties, regulations on BNPL advertising, l inclusion of BNPL-related expenses consumer credit score data and clear avenues of redress. What do you think of these proposals?
Bryan: I think they’re very interesting. The Singapore FinTech Association, under the leadership of MAS, established the BNPL Working Group – Atom being one of the founding members.
The industry launched the BNPL Framework for a Code of Conduct in the Singapore market to protect consumers and ensure they have a feedback channel to BNPL suppliers, while ensuring that there are sufficient safeguards for consumers.
Listen to the full podcast on Awedio: SPH’s free digital audio streaming servicewhile Bryan Quek shares more on the art of balancing the BNPL plan in a way that avoids overspending and over-indebtedness.
To download the podcast.
This article was first published in MONEY FM 89.3.