The Buy Now Pay Later (BNPL) scheme and Easy Payment Plan (EPP) have become increasingly popular during the COVID-19 pandemic. Whether you are a consumer or a merchant, what should you do to take advantage of this new-fangled payment option? In this guide, I’m going to talk about ways to save your money and hopefully give you some inspiration to grow your business!
What is a Easy Payment Solution?
It is a point of sale loan solution a.k.a flexible payment solution that allows you to make purchases without paying the full bill in one go. The way it works is similar to how you borrow a fixed sum of money from a loan service provider, and then make monthly payments to clear off the debt. This way, you get to purchase and use the goods first while paying it off gradually. Generally, there are two types of flexible payment solution you can find in Malaysia:
i. Buy Now Pay Later
This is a short-term loan solution offered by fintech companies to make your purchase more affordable instantly. This point-of-sale financing is usually interest-free and comes with a lot of rewards to gain traction of shoppers. This payment method is gaining popularity in the retail sector especially the fashion industry.
Some of the popular BNPL payment gateways in Malaysia are Atome, PayLater, and Hoolah.
ii. Easy Payment Plan
It is basically a Buy Now, Pay Later plan offered by the banks. It turns the purchase using your credit card into an instalment of a smaller amount of payment ranging from 3 to 36 months depending on your purchase amount. It is common to enjoy a 0% interest when you spend at the banks’ partner merchants. This type of payment solution is usually adopted by retailers selling electronic devices, home appliances and furniture. These are the well-known banks that offer EPPs in Malaysia: Maybank, CIMB, Public Bank, Citibank, HSBC, RHB, Standard Chartered, and Hong Leong Bank.
Buy Now Pay Later vs. Easy Payment Plan: Which is better?
While you may think the BNPL scheme may be the same as the EPP as they both serve as a purchase loan option, you will be surprised with how different they actually are. Keep reading and find out!
What you need to know as a consumer
| EASY PAYMENT PLAN | BUY NOW PAY LATER | |
|---|---|---|
| 0% interest instalment | Yes (Usually for available for partner merchants) | Yes |
| Duration of repayment | From 3 to 36 months | From 1 to 4 months |
| Late payment fees | Yes | Yes |
| Late payment interest charges | Yes (15%-18% p.a. on the outstanding balance) | No |
| Credit limit | Usually twice your monthly income | Much lower than credit card limit |
| Who can use | Credit card holder (Applicant with income at minimum RM24,000 per annum ) | Those who do not have a credit card but at least have a debit card |
What you need to know as a business owner
| EASY PAYMENT PLAN | BUY NOW PAY LATER | |
|---|---|---|
| How to get it | Be bank’s merchant partner or via a payment gateway provider (A certain credit card sales benchmark depending on the bank’s requirement. For example Maybank, RM30,000 per month) | Direct contact BNPL service provider |
| Basket size | Usually works with any purchase amount of RM500 and above | Amount depending on users purchase and repayment record. Usually works with smaller purchase amount. |
| Who is suitable | For medium to large scale of offline and online businesses | For businesses selling medium price range products |
What Are The Key Drivers For Shoppers To Use Instalment Payment?
You may have noticed the impacts of the movement restrictions and lockdowns triggering the change of consumer behaviour from what and how they buy, to how they pay. Payment solutions are taking a big part from brick and mortar models to digital commerce.
Why do shoppers like instalment payment?
- It is an instant zero-cost financing
While the 0% interest instalment plan and BNPL allows you to shop without worrying about immediate funds upfront, the monthly instalment payment is interest- free! - It provides a financial relief by making many products more affordable
Flexible payment options allow customers to own what they like by splitting the bill to smaller portions and paying back over time is helping those who can’t afford paying a bigger size checkout cart especially during the hardship of COVID-19. - Shoppers can save more with an attached loyalty and rewards program
Instalment payment providers usually offer a lot of special rewards programs to attract consumers in using their service. Shoppers can earn points and convert points into gifts, vouchers or any other preferred items available.
Apart from giving the consumers the flexibility of instalment payment, it is also seeding opportunities for businesses.
What Are The Opportunities For Businesses Who Offer Instalment Payment?
If you are a business owner, it is important to understand your customer perspectives to improve your business and succeed. As mentioned above, you now understand how flexible payment benefited your customers. But what does it mean to you?
Have a look below to find out why your business can thrive by offering a 0% instalment plan to your customer.
- You will make better sales
Research shows that a 20-30% raise of sales conversion after retailers using BNPL as an alternative to make payment. This is because a flexible instalment plan is giving merchants a different selling strategy by attracting eyeballs with the affordable price scheme, giving the impulse of purchase a push without needing to earn less by giving discounts on the products. - You are improving customers’ user experience
Giving customers their favourite payment options with flexibility, you are providing customers with greater convenience and value. - You are decreasing cart abandonment
Imagine David, who would like to get a shirt and a pair of shoes for his new job, however, due to budget restraints, he has no choice but to choose only one of the products from your store. With an instalment payment option, he can now spread the cost across a longer time frame to paying them and buy both items. The best part is, you can now sell both products instead of just one. - You will increase customers’ average order value
Not only does zero interest instalment payment increase the number of sales, it encourages customers to spend because they are now worry free of being unable to afford higher value products such as branded fashion items and electronic devices. - You will get business a boost with new customers
The fact is that many consumers cannot afford to pay out a large sum especially after being hit by this covid pandemic. By using instalment payments, you are reaching out to all the potential customers who have been looking to purchase your products and also those who may not have the financial capacity right now. - You are staying competitive and gaining customer loyalty
Customers are more likely to return and repeat their purchases for the convenience and service given by your store. You are staying ahead of your competitors compared to those without any flexible payments option in place.
How To Sell Your Products Using 0% Instalment Plan?
Now you have known what benefits that interest free instalment plan can bring to your business, how are you going to start selling using 0% instalment plan?
- Know your audience
Instalment payment solution is not exactly an essential service that can be found in every retailer. However, the expectation of having a flexible payment solution is absolutely growing fast. So you need to ask yourself these questions before setting up a flexible payment solution:
What product category are you selling?
Who will buy from you?
Will they use instalment payment to buy from you?
Once you decided that your business is in a good place to provide this payment alternative, go to step 2.
- Get a payment gateway setup
It is critical to do a survey about the payment provider in these four dimensions: merchant rate, contract terms, user base, and point of sale integration.
Ideally, you’ll want to go with a trusted payment provider equipped with a strong and growing user base. This helps your business to attract more customers.
- Encourage your customers to use it
Once everything is set in place, it is time to spread the word. Make good use of your social media channels to impress your customer, push impulse purchase by giving them the angle to economically own that product by using instalment payment. Promoting your product or service by price tagged with a smaller and manageable bill amount is always a good choice.
Final Thoughts
Easy payment plan is a win-win solution for both consumers and businesses. It is a great way for consumers to underwrite large purchase at low cost while allowing businesses to boost sales.
Are You Ready To Win For Your Business?
Contact us now to know more about how we can help with small business friendly Buy Now Pay Later service.
Source: https://dcr.com.my/easy-payment-plan-for-business-in-malaysia/
Dynamic Creative & Resourceful (DCR) Marketing Sdn Bhd is a 15 year old company. We focuses and specializes in Marketing, Rewards Loyalty, Usage & Redemption Programme with most of our clients are from the Financial & Corporate sectors (Local & International).