1. Limited access to credit in SEA coupled with COVID led acceleration in digital economy offers fertile ground for BNPL to grow in SEA

COVID accelerated the adoption of services in both nascent (ehealth, ed tech, eB2B) and evolved (on-demand, eCommerce) digital sectors. It has provided these sectors with firmer grounds for medium to long term growth.

Most of these services provided seamless connectivity with digital payments and eased the transition from offline/non-digital modes. However, credit needs remained unfulfilled due to relatively low credit card penetration in most of Southeast Asia (ex-SG and ML). BNPL has been able to step into this gap and offer a transparent and convenient access to credit. Accordingly, take-up of BNPL offers has been strong.

Credit cards per capita, 2019

2. While online services started the adoption of BNPL systems, offline still dominates the total payments and hence present a significant opportunity

While online shopping is a core use-case for BNPL, there is strong adoption in high frequency use-cases like food ordering, bill payments and ride hailing, as well. These use cases also show growing familiarity and comfort for BNPL by consumers.

In addition, offline BNPL payments offer another meaningful opportunity over the medium term. Currently, cash dominates offline payments.

Use-cases of BNPL services

Due to these factors, the total BNPL market in SEA and will grow to more than 5x of 2020 levels by 2025. The growth will be driven by higher user penetration as well as higher transaction per user going forward.

# BNPL value (USD bn) – Southeast Asia, Mn, 2020, 2025

3. Significant capital raise activities suggest sustained near-term competition and the need for rapid differentiation

Given the opportunity, there has been significant capital raising, M&A and partnerships in the BNPL segment. Accordingly, competitive intensity could remain high in the near future. Diversity of use cases, partnerships with key stakeholders in the online / offline ecosystem and rapid scaling could be some of the options to stay ahead of competition.

Recent capital raise activities in BNPL, Global

One key event to look out for will be the level and nature of regulatory intervention by government bodies and the central banks in the region. Directionally, regulations should increase transparency and trust for users. Hence, some level of regulation could be be beneficial for the sector in the long term. In the meantime, BNPL players could proactively manage credit risks for their users and mitigate any negative surprises down the line.


  • Roshan is a Partner at Redseer Strategy Consultants and is focused on Southeast Asia. He was ranked highly by key long-only and long-short institutional investors. He has organized several conferences, corporate events, and non-deal-roadshows.