Buy now pay later (BNPL) is a new fastest growing segment that has gained popularity in Vietnam despite the economic fluctuations caused by the pandemic. Due to the spike in the e-commerce market and the massive penetration of the digital economy, the buy now, pay later payment method has gone from being a niche payment method to a trend in payments over the past few years, it has also taken Vietnam’s retail market by storm.
Banks, merchants, and financial tech companies have developed these payment plans for online purchases through smartphone apps allowing consumers to purchase products by making partial initial payments and by making ease weekly, bi-weekly and monthly installments. A survey by Research & Markets suggests that in Vietnam, the BNPL industry is expected to grow strongly over the medium to long term. This method helps to boost consumer demand.
Market players regionally
BNPL payments in Vietnam are expected to grow by 126.4% on annual basis to reach US$ 1123.9 million in 2022. The BNPL payment adoption is expected to grow over the forecast period, at a CAGR of 45.2% during 2022-2028.
According to Vietnam Buy Now Pay Later (BNPL) Market and Investment Report 2022-2028, the big players are Atome, Finazar, Fundiin, Wowmelo, Traveloka, Agoda, LITNOW, & Sacombank, Grab, and Afterpay.
Fundiin, a domestic BNPL platform founded in 2019, is expanding its service to the younger customer base, such as Gen Z and Millennial Vietnamese.
Vietnamese customers can buy their favorite products now and pay later in four installments with the LITNOW app, developed by LIT Australia Technology Group. Customers can shop offline or online with LITNOW without paying upfront. A purchase will be automatically broken up into four payments over a period of 90 days instead.
Grab has partnered with Credit Saison, which owns HD Saison in Vietnam, in order to integrate BNPL into its app e-services for consumers considered creditworthy based on their financial behaviors and brand loyalty.
A Vietnamese family investment firm, Phoenix Holdings, has announced a joint venture with Indonesia’s largest BNPL platform, Kredivo, to enter the Vietnamese digital economy.
BNPL will boost soon
BNPL Gross Merchandise Value is projected to rise from US$ 496.4 million in 2021 to US$ 10,528.1 million by 2028. A number of factors have contributed to the recent surge in BNPL transactions, such as rising merchant adoption, its omnichannel application, flexibility, and loyal youth consumers. According to Juniper Research, BNPL payments are expected to represent nearly a quarter of all global E-commerce transactions by 2026, up from just 9% in 2021. Gen Z and millennials overwhelmingly use this payment type. According to eMarketer, 44% of Gen Z and 37% of millennials are expected to use BNPL in 2022, versus 23% of Gen X and 9.4% of baby boomers.
The market opportunities and risks in Vietnam?
Both startups, as well as established corporations, are investing in BNPL’s products in Vietnam. The deferred payment market is expected to gain widespread adoption across the country, from local BNPL platforms to regional players. It is still early in the development of Vietnam’s BNPL sector. BNPL startups are therefore looking to raise funds actively to fund their market expansion strategies and be first-movers in a market that is expected to grow significantly in the next few years.
However, there is also a risk in the market. As a result of the penalties given by BNPL, concerns have been raised regarding the transparency of repayment conditions. According to reports, Grab charges, late payers, $10. Consumers may therefore find themselves paying a higher total price than expected for a product. In other words, these are ‘hidden costs’ that accumulate in the credit balance. More compliant and tighten policies may be placed to guide the market developed healthily.
The increased UA cost
Along with more players entering the market, the more fierce competition drives the traffic cost to keep increasing. It will be a challenge for BNPL company to balance the revenue and UA (user acquisition) cost. The capability of advertising delivery will be one of the key factors in deciding the last winner.
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