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Design Research

Buy Now Pay Later: in Asia

by Jasmine Tan andMichelle Lam
26th September 2022

With Buy Now Pay Later services increasing in popularity globally and in Asia, we took some time to explore the perception of these services in Singapore to understand what the companies behind them should consider when operating in the Asian market.

To get to the bottom of this issue, we conducted in-depth interviews with everyday Singaporeans, and found that in the Asia market, BNPL and financial services need to consider the following when thinking about their offerings: 

  • High awareness of spending and saving
  • Debt is viewed differently

Why? Because not taking these issues seriously will affect the adoption and retention of the services.

High awareness of spending and saving

In many Asian cultures, consumers have been brought up to believe in frugality and the importance of saving. They may not want to spend on non-essentials, especially if they do not have the excess cash available. Many of the participants we interviewed spoke frequently about “spending within my means” and believing that “if I can’t afford it, I shouldn’t buy it”.

Since instalment payment plans work against the save more spend less mindset, many also have the impression that these plans, such as what BNPL offers, will encourage increased and irresponsible spending behaviour. Participants mentioned how instalment payments could change their perception of the cost of an item, becoming “desensitised to a couple of hundred dollars per instalment as opposed to a few thousand”. They feared that this would cause them to overcommit to multiple instalment plans and cause bills to snowball into more than they could afford. 

To address concerns about overspending through BNPL services, it’s important for brands to help customers feel the service is not here to promote irresponsible spending, but rather, to help them pay more effectively using the service. 

For example, if the service’s marketing imagery and material focus solely on showcasing usage for “non-necessity” spending such as fashion, it could reinforce the impression that these services are purely to promote spending and lifestyle inflation. Instead, consider including imagery and messaging on using the service for more everyday spending, such as homeware, and educational courses.

Debt is viewed differently

In addition to their careful spending, consumers in Asia may be more wary of accruing debt, even if financing the loan or instalment is feasible within their income. Loans, instalments, and thus BNPL payment schemes were still considered a form of debt, and debt in any form was something to be avoided unless necessary, for example for housing or vehicles. 

Most participants we spoke to considered “any money that is owed” to be a form of debt, regardless of whether they felt that they could pay it off. This includes the usual personal or housing loans, but also credit card bills, instalment plans and BNPL payment schemes. To them, the idea of having debt was uncomfortable, and to be avoided. 

This idea of debt aversion in Asian cultures is not new. While attitudes may be shifting with younger generations, increased anxiety when it comes to loans continues to be prevalent in Asia, and the statistics show it. The average credit card debt per UK household stood at £2,033 in August 2021 (UK). In comparison, the average rollover balance per principal cardholder in Singapore in 2022 is SGD$976 (~£593). This debt aversion seems to be deeply tied to cultural upbringing, regardless of current residence, as an American study in 2015 found that loan aversion was more common among Asian students than white students.

In this regard, positioning the BNPL proposition as a way to allow consumers to spend on what they want could create scepticism and anxiety instead of empowerment. That means focusing on reducing anxiety by putting users in control and offering them transparency in the process.

To help consumers manage their concerns around debt, acknowledge these concerns and ensure they feel in control of their payments owed. This might mean allowing for and surfacing choices around different payment plans and the option to pay off instalments early without penalty. Ensure that these options are not hidden away and are available at all times. For example, avoid only allowing paying off the total sum after the first instalment.

Knowing your customer pays when thinking about BNPL offerings 

Any product or service entering a new market must consider and respect the cultural differences and habits people express in the market to successfully localise a product or service. For BNPL services, and to some extent financial services more broadly, cultural beliefs and habits around spending and attitudes towards debt should play a role in informing design, technology and product decisions to successfully cater to each market. These differences in cultural beliefs about money need to be addressed across the various layers of the service, from positioning and marketing, to how the service and its payments work.

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