With BNPL now one of the hottest topics in the region, we expect to hear news about it every hour on the hour. So, it wasn’t really a big surprise, when it came to our attention that a new major player was entering the industry.
Fresh off their acquisition by Pine Labs, Fave is back in the limelight with the launch of Fave’s Buy Now Pay Later (BNPL) product. With an established customer base and over 40,000 stores in their network, it looks like a sound business decision for the brand. To find out more, we had to speak to them to better udnerstand the motivations and business opportunities here.
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We had a chance to interview Fave’s CEO Joel Neoh about their latest offering and what it means for the region. He shared their plans and where the industry is going. Read the full interview below.
Could you share why FAVE is entering the BNPL scene?
The launch of Fave’s Buy Now Pay Later (BNPL) comes at a time when the region saw a surge in consumers purchasing goods and engaging services online, and the once-traditional offline businesses connecting with consumers digitally. With the rise of smart payments and the change in spending habits, fintech and payments solutions such as Fave will play a critical role in redefining how the new generation of consumers use and get credit for the accessibility of FinTech solutions.
It is also timely to address the increased demand among consumers after long periods of COVID-19 lockdowns and social restrictions. Consumers are now looking for flexibility in purchasing items and alternatives that could be easier on the wallet. At the same time, merchants are seeking innovative ways to revive their falling sales during difficult times. Through FavePay Later, merchants can benefit from higher conversion, revenue and customer loyalty while consumers have greater flexibility to pay for their purchases over three interest-free instalments.
How do you plan to stand out sustainably in such a crowded market?
As one of the leading smart payment apps in the region, Fave believes in pushing boundaries and innovating to create better experiences for our customers who care about flexibility, convenience and rewards. FavePay Later is built with these customer needs in mind, and will continue to enhance the features to provide them with the best payments solutions. Coupled with frequent purchases of loyal customers and vast data sets of user behaviour, we were able to whitelist millions of Fave users and provide instant access to credit to be used at over 40,000 store locations in both Singapore and Malaysia.
Fave users also earn up to 10% cashback with every offline and online purchase made via FavePay Later, to be granted upon successful payment of the first instalment.
For merchants, it is a hassle-free service without any additional integrations. The FavePay Later can be easily enabled once the merchants accept FavePay as a payment option at their stores. Merchants can now provide instalments for their customers with zero risks and liability and get full payment upfront and benefit from the huge Fave’s customer base that is using the app frequently for their daily purchases.
At Fave, we are excited to continue our goal in making everyday shopping special and rewarding with incentives such as cashback, discounts and flexible payment options during the lockdown period and beyond.
While BNPL is very popular right now, what are the issues holding back the industry from critical penetration?
Generally speaking, there are multiple factors at play – from customer awareness and simplicity of the platform to regulations. For consumers, unnecessary friction to get access to the approved credit, fees and penalties could impact their adoption of BNPL platforms. Bad debts from poor buying decisions could also affect providers and their ability to scale sustainably.
How do you foresee the regulatory landscape around BNPL in Southeast Asia? Will there be more roadblocks in this industry?
This alternative flexible payment method, primarily for e-commerce, has seen red hot growth in overseas markets, especially Australia, Europe and the United States, for some time now. It’s only natural that with every disruptive innovation the regulatory landscape will evolve and adapt as well. In Australia, a BNPL code of practice outlining consumer protection standards and created by the Australian Finance Industry Association (AFIA) recently came into force.
With BNPL getting traction in Southeast Asia, the discussion around regulating the sector has understandably increased. For example, in Singapore, the Monetary Authority of Singapore (MAS) is currently consulting with industry players and is potentially looking to create a framework that is risk proportionate and evenly applied across providers.
We are happy to be part of the conversations and process in shaping the policies and keep the objective in mind about striking a balance between regulation that protects the interests of consumers without stifling innovation of a product that is delivering value to consumers and merchants.
Which markets have the most potential in Southeast Asia?
BNPL is redefining the ways how customers get and use credit and has immense potential to grow in the markets where access to credit is limited and has high entry barriers. Almost 400 million of the adult population in Southeast Asia are underbanked or unbanked with limited options for credit. Top that with mobile penetration levels and the ever-increasing growth in e-payments and you have the right levers for the high potential of BNPL adoption rates in the market.
We have rolled out FavePay Later as a pilot in Singapore and Malaysia In June 2021, and are looking forward to extending this service to customers in India, Indonesia and other markets in the coming years.
What’s next for FAVE’s BNPL offering?
With an increasing number of strategic partnerships with large tech firms in 2021, we plan to expand our BNPL offering to some of the leading e-commerce companies in Southeast Asia in the latter half of 2021.
We will also be releasing a version for Android users in the next two months. Consumers and merchants can look forward to these as we continue our mission to bring a joyful shopping experience to everyone.