The Buy Now, Pay Later (BNPL) programme lets AlipayHK users spread purchases worth USD 12.87 or more across a three-month instalment plan. It’s available for AlipayHK merchants and on Taobao (Alibaba’s online shopping platform). Ant Bank can use Hong Kong as a testing ground for the BNPL programme before rolling it out in neighbouring markets. For a limited time, the bank will waive handling fees.
This development can help strengthen Ant Group’s growth prospects as it faces tighter regulatory oversight in mainland China: In 2021, Beijing ordered Ant Group to break off its loans businesses, including short-term loan product Jiebei and virtual credit card Huabei, from subsidiary Alipay.
BNPL is gaining traction across Asia-Pacific. The share of ecommerce payments made with BNPL grew about 67% YoY in 2021, according to FIS. And in Hong Kong, 12% of adults made a purchase with BNPL in the same year, per a YouGov survey.
The lower middle class is the largest social class in Asia-Pacific, representing two-thirds of the regional population, per World Data Lab stats cited by the Brookings Institution. This segment comprises ‘entry consumers’—people purchasing consumer packaged goods and durables like refrigerators for the first time. They may be more likely to use BNPL services to help manage their expenses.
Entry consumers and young consumers who haven’t yet reached their full purchasing power may struggle to obtain credit from traditional financial institutions because of factors like limited credit histories. The share of consumers in China ages 21 to 24 who have credit cards is more than 20% lower than older generations, per McKinsey. This makes them more likely to use alternative lenders, including BNPL providers.
BNPL is most prevalent across digital shopping channels, and in Asia-Pacific, this is where many consumers shop. Retail ecommerce sales in Asia-Pacific are expected to hit USD 3.477 trillion by the end of 2022, growing 10.2% YoY and accounting for 28.6% of total retail sales, per Insider Intelligence forecasts.
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