How do buy now, pay later companies in Malaysia make money?

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One of the questions I always have about BNPL companies is how they fund themselves.

After all, their service often looks too good to be true. If they offer all these benefits to their users, like discounts and 0% interest charges, how do they make money in the first place?

To answer this question, I contacted several BNPL companies active in Malaysia and finally got a response from three companies – Split, Atome and myIOU. They say so.

Relying on merchants

In our respondents’ responses, the answer turned out to be pretty simple. Split co-founder and CEO Dylan Tan said the Malaysian company does not charge consumers anything, not even late fees or administrative, processing and application fees.

“Our revenue model hasn’t changed since the beginning,” Dylan explained further. “100% of our revenue comes from merchant success fees, which are percentage commissions that merchants pay us on all sales we process.”

Dylan (center) and his team / Photo credit: Split

According to Gwen Knhor, head of marketing at myIOU, myIOU also charges a service fee to merchants who use its services. The company does not charge customers any late fees.

Atome said it also doesn’t charge any interest on late payments. Instead, customers who miss payments will simply have their accounts suspended immediately.

“Our business model charges merchants a small commission per transaction,” said Gary Yeoh, general manager of Atome.

He went on to explain: “In return, our merchants can expect a larger average basket size to drive more sales and acquire more new users as they are meeting the needs of a generation of customers who are looking for more payment options, flexibility and accessibility in a secure environment.”

This is further amplified by Atome’s efforts to partner with merchants on marketing campaigns and co-branding programs, such as the loyalty program Atome+.

“To reiterate, we rely heavily on the success of our merchant partners and our customers’ ability to pay in a timely manner and reuse,” he explained. “If consumers can’t pay their dues, then the equation doesn’t work for us as a business.”

But who is really paying?

It seems that Atome, Split and myIOU are largely dependent on the success of the merchants to sustain their operations. very fair.

However, if merchants pay such fees, aren’t they just passing those fees on to consumers, perhaps by raising the price of their products?

Three representatives disagreed.

“I do not believe [this is true] In Malaysia,” Dylan said. “In our experience, the incremental revenue that merchants receive from BNPL often exceeds the additional commission fee; raising prices will only drive customers away. “

According to Dylan, many of Split’s merchants see BNPL as a customer acquisition channel that is cheaper than traditional acquisition channels on a cost-per-acquisition basis.

Image Credit: Split

“Similarly, credit cards charge merchants higher fees compared to other payment methods – did the price go up when credit cards were first introduced?” he noted.

“Arguably not,” he replied. “But consumers will definitely pay more for annual credit card fees, compound interest and late fees (which we don’t have).”

For Dylan, it’s not in the merchant’s interest to make customers pay more, after all, consumers are the ones who ultimately make decisions with their wallets.

Gary said Atome doesn’t work with merchants to pass the extra cost on to consumers. Of course, that doesn’t mean businesses don’t do it.

“We’re also very careful and selective when it comes to onboarding merchants,” added Gary. “We conduct regular reviews and check-ins with our merchant partners. When customers report such behavior, our Atome Customer Service Department is also vigilant about such behavior.”

Optimized for the future

Regardless of the price hike, though, financial experts have been wary of BNPL companies, especially since they are not regulated.

In fact, we have spoken to several Malaysian financial bloggers on this topic, many of whom advised against using BNPL services.

However, some BNPL companies such as Split appear to be introducing certain features that may help consumers manage their money.

“We’ve refocused our BNPL business on profitability over growth, and at the same time, we’re pioneering a new debt-free affordability tool called Save Now Buy later (SNBL),” Dylan shared about Split’s upcoming launch s plan.

With SNBL, customers are rewarded with discounts as they save monthly for future purchases from SNBL merchants on the service.

On the other hand, myIOU recently launched a co-branded VISA prepaid card to reward loyal consumers. With this card, consumers can spend at any merchant that accepts VISA and then convert the purchase into a BNPL transaction.

According to Gwynn, this is currently in preparation, pending approval from Bank Negara.

myIOU is launched by IOUpay, a Malaysian fintech company listed on the Australian Securities Exchange (ASX)

Meanwhile, Atome is expanding its service beyond its Pay 3 plan to offer more deferred payment options. Gary also said the company is expanding its verticals, starting to offer its users dining, hospitality, travel, automotive and supermarket products.

“At the same time, we also want to enhance the customer experience and promote the responsible use of BNPL,” he shared.

According to him, the way Atome is doing this includes adding Malay language capabilities and an iBNPL partnership with PayHalal, a Shariah-compliant payment gateway that allows riba-free 0% interest payments.

did you know: In Islamic finance, riba refers to the interest charged on a loan or deposit. Religious practice prohibits riba.

“Unlike credit cards where customers can ‘roll over’ their outstanding balance and charge interest, Atome customers are blocked from further use until outstanding payments are settled,” added Gary.


While the BNPL companies we interviewed profit from the merchant side, some BNPL models do charge interest fees on late fees.

Therefore, it is always wise to do your own research on the service before using it, and of course there are some recommended practices to follow when deciding to use the BNPL service.

Earlier, we spoke to Malaysian personal finance bloggers for their advice and warnings on using BNPL, and shared our findings here.

  • Read more finance-related articles we cover here.
  • Read more BNPL articles we wrote here.

Featured Image Credit: Split/Atome


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