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No Credit Card? Just Buy Now Pay Later (BNPL) lah

Updated 30 Nov 2021 – By Loh Chent Yong

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Long gone are the days where cash payment is the only option to pay for what we buy. Now, with the option of credit cards and digital wallets, we could pay for just about anything from the tip of our fingers. Especially with credit cards, we won’t even need to worry about not having enough balance in our bank account as we can always settle it by the end of every month. However, with the recent introduction of the Buy Now Pay Later (BNPL) method, it has provided us with more flexibility when it comes to making payments. Currently, BNPL is projected to be the fastest growing online payment method in Asia, with a 64% growth rate by 2024. So, let us explain to you everything you need to know about this currently trending payment method.

“First of all, What Is BNPL?”

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BNPL, as the word suggests, is a type of payment method that allows you to make a purchase now and pay for it later. To be more specific, it allows the payment of an order to be made through monthly instalments over a short-term period, usually for about 3 to 6 months. A few examples of BNPL providers in Malaysia include Atome, Fave PayLater, Hoolah, PayLater by Grab, and SPayLater by Shopee. Now, you might be thinking: “Something this convenient must be very difficult to register and use right?”. No, on the contrary, it's actually very easy to use as it only follows these three simple steps:

  • You buy something from a BNPL participating retailer and choose to pay via the BNPL method.
  • You may be asked to make a downpayment first, usually for the first-month instalment.
  • You pay off the rest of the balance through monthly instalments, usually for about 3 to 6 months.

Easy enough, right?

“So, Why Are So Many People Using BNPL?”

There are many benefits when it comes to using BNPL.

1. Easy to Register and Use

To register for the BNPL payment method, all you have to do is register for an account online with your bank account information. It only takes about a few minutes of your time. More importantly, unlike registering for other payment methods, no additional supporting document is needed. When it comes to using it, you just have to follow the three steps mentioned above and you’re good to go. 

2. 0% Interest Instalment

Unlike other payment methods, most BNPL providers won’t charge you any interest for your purchases, unless you miss a repayment day or don’t have enough balance in your bank account.

3. Allow Easier Budget Management 

By using the BNPL method, you could split your repayment for up to 6 months. This would allow easier budget planning and management especially when it comes to paying for expensive purchases. For example, Shopee SPayLater provides the option of spreading out your repayment up to 2, 3 or 6 months.

4. No Good Credit Score Needed

Unlike credit cards where banks would perform a credit score check to see if you are eligible, BNPL providers won’t do so. So, you could register for the BNPL method even if you have a poor credit score. 

“Is it really that good?”

Image Source: The Malaysian Reserve

Of course. But, as everything has both its positive and negative sides, the same goes for BNPL, so there are some things that you would need to be aware of when it comes to using it.

1. Be A Diligent Spender

BNPL may encourage impulse buying as unlike paying by cash, BNPL allows you to take the product home first without putting a single cent towards it. This may be tempting and it may cause you to buy things you don’t actually need. This may not seem to be an issue in the short term, but in the long term, it would cause much unnecessary debt to accumulate, and may eventually lead to bankruptcy

2. Don’t Miss Any Payments!

Late payment fees could be a burden if you couldn't make your repayment on time. If you don’t have enough balance in your bank account on the repayment day, you would need to log into your account and pay the amount due within 24 hours, or else you would be charged a late payment fee. Depending on the BNPL provider, it may end up being more expensive than using a credit card. For example, Atome would charge an RM60 admin charge per order for every deferred payment.

3. Remember to Pay On The Day Specified 

Usually, BNPL providers would create a repayment plan for you and wouldn’t allow you to choose your repayment date, unlike credit card and personal loan payments. So, you would need to always be alert of the date and the balance in your bank account to prevent missing a repayment day. As an example, users of Shopee SPayLater have to pay their outstanding amount on 10th day of the following month. 

4. Your Credit Score May Be Affected

Although BNPL providers wouldn’t perform a credit score check when you register for them, some of them would still report your missed payments to credit reporting agencies. This would negatively affect your credit score and your ability to apply for a loan from the bank in the future.  For instance, Hoolah will notify any credit reporting agency or bureau located in Malaysia if you fail to pay your outstanding debts for too long. 

“It’s The Same With Credit Cards, Right?”

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So far, BNPL may seem similar to a credit card. You may even think that both are the same thing, but with different names. However, there are actually some major differences between them.

1. Registration Process

The registration process for a credit card is more complicated than that of BNPL. For credit card registration, you would need to prepare a lot of supporting documents before actually registering for it with the bank. On the other hand, for BNPL registration, you only need to register for an account online with a valid bank account, just like how you register for every other website!

2. Credit Score

You would need a good credit score to apply for a credit card, but for BNPL, you won’t need to. However, late repayment could still potentially damage it though.

3. Interest Charges

Usually, credit cards have a higher interest rate compared to BNPL. Most BNPL providers won't charge you any interest provided you make your repayment on time.

4. No Cashback or Points Earned

Unlike credit card which allows you to earn cashback or accumulate points on every purchase you make, BNPL only allows you to split your payment. Therefore, if you're looking for more benefits from your payment, we would recommend using a cashback or rewards credit card. 

“So, Should I Use BNPL Now?”

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BNPL seems to be a sweet deal for every shopper. However, as the saying goes, “with great power comes great responsibility”, it’s entirely up to our own self-discipline on how we utilise this payment method to get the full benefit out of it. One mistake and it would cause us a lot of unnecessary headaches. 

Therefore, here are some advice when it comes to using BNPL.

  • Always check if you can afford to repay on time before applying for BNPL.
  • Recommended to only use for emergencies or necessities that you don’t have enough money to pay for in the present. 
  • Check if the item is really currently needed.
  • Always make sure to meet your repayment day. 

In the end, although BNPL is indeed a convenient and easy to use payment method, we would still suggest only using it when the situation really needs you to, if not, it’s always better to spend money you have on you. 

*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the article.


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