Buy Now, Pay Later: How Does it Work in the Philippines?

How Does Buy Now, Pay Later Work for E-Commerce in the Philippines?

In recent years, a new payment option has gained popularity in the eCommerce world: buy now, pay later (BNPL). This payment option has been popular for many businesses since it enables clients to make purchases without paying the entire amount upfront.

In the Philippines, where online shopping is on the rise, BNPL has become increasingly prevalent. According to Research and Markets, the BNPL’s gross merchandise value in the country will reach US$9,903.2 million by 2028.

In this blog post, we will dive into how BNPL works for eCommerce in the Philippines, the benefits and drawbacks for businesses and consumers, and the trends and future of BNPL in the Philippines.

What is Buy Now Pay Later?

Buy now, pay later (BNPL) is a payment method that allows customers to purchase goods or services without paying the full amount upfront. Instead, the customer can pay for their purchase over a period of time in installments. 

Typically, the customer will make an initial payment at the time of purchase, with the remaining balance paid off in several installments. For example, a customer buying a smartphone for Php 30,000 could pay for the item in three interest-free installments of Php 10,000.

buy now pay later philippines: payment methods

BNPL is often offered by third-party providers who partner with eCommerce businesses to offer the payment option to customers. The customer will apply for BNPL at checkout and, if approved, will be able to complete their purchase using the BNPL option. 

This option has become increasingly popular in recent years, particularly among younger consumers who may not have the funds to pay for a purchase upfront but still want to make a purchase.

How Is BNPL Different From a Credit Card?

While both BNPL and credit cards offer customers the ability to purchase goods or services without paying the full amount upfront, there are several key differences between the two payment methods.

Let’s take a look at some of them.

BNPL Credit Card
Offered by third-party providersIssued by financial institutions
Short-term financing option for specific purchases Ongoing credit for multiple purchases
Pay off in installments over a period of weeks or monthsBalances can be carried from month to month and accrue interest
More relaxed approval requirementsNeeds strong credit history

Advantages of Buy Now, Pay Later for Merchants

After a customer makes a purchase, a BNPL supplier will transmit money right away to the merchant. These businesses are able to take on credit risk for both the consumer and the merchant, paying them even if the consumer defaults, thanks to the use of sophisticated algorithms.

No matter what, everyone is protected.

Here are some advantages of BNPL for merchants:

Increased Conversion Rates

When customers have the option of paying for their purchase over time, they are more likely to complete the purchase than they would be if they had to pay the full amount upfront. 

BNPL can also help merchants increase their average order value (AOV). By offering installments, they can encourage their customers to purchase higher-priced items that they may not have been able to afford otherwise. 

This can help increase the overall revenue and profitability of the merchant.

Attracting New Customers

Another advantage of buy now, pay later in the Philippines is its ability to attract new customers. BNPL can help merchants reach a wider audience, expand their customer base, and increase brand loyalty.

Customers who may not have a credit card or who may not wish to utilize their credit card for a certain purchase may find the BNPL choices particularly appealing. 

Another demographic that BNPL attracts are younger customers, who may not have a lot of disposable income or who may be more inclined to make purchases using alternative payment methods. 

By offering BNPL, you can make their products and services more accessible to these customers. 

Competitive Payment Options

By partnering with BNPL providers, merchants can offer a more comprehensive and competitive payment option that can help them stand out in a crowded market.

Merchants can also gain access to valuable data and insights about their customers’ purchasing behavior. 

This data can be used to inform marketing and sales strategies, as well as product development, which is an excellent way to beat the competition.

Improved Customer Satisfaction and Loyalty

BNPL providers often offer flexible payment terms and other benefits, such as no interest or hidden fees, which can further improve the customer’s experience and satisfaction. This, in turn, can lead to increased customer retention and loyalty.

Reduced Fraud Risk

As a business owner, you can benefit from their expertise and resources in identifying and preventing fraudulent transactions. 

Advanced fraud prevention and risk management solutions are frequently provided by BNPL providers, which can help lower the possibility of chargebacks and fraudulent transactions.

Also, BNPL providers often assume the risk of non-payment and chargebacks, which can be costly and time-consuming for some merchants to manage. In that way, the financial burden is taken off your shoulders, allowing you to focus on other aspects of your business. 

Advantages of Buy Now, Pay Later for Customers

Convenient Shopping Experience

Buy now, pay later offers customers a more flexible payment schedule than traditional payment methods. They can often choose the installment plan that best suits their needs, whether that be weekly, bi-weekly, or monthly payments. This can help customers better manage their budgets and cash flows.

Quick, Simple Approval and Setup

BNPL providers often partner with eCommerce businesses to offer the payment option at checkout. They use automated systems to assess the customer’s creditworthiness and determine their eligibility for the payment option. This means that customers can easily apply for BNPL at the point of sale without having to navigate a separate application process. 

Greater Financial Flexibility

Buy now, pay later can be a good option for customers who do not have a credit card or who may not want to use their credit card for a particular purchase. Depending on the provider and the terms of the BNPL agreement, customers may be able to access lower interest rates and fees than they would with a credit card.

How Does Buy Now, Pay Later Work in the Philippines? 

Buy now, pay later (BNPL) is becoming an increasingly popular payment option for the growing online shoppers in the Philippines

The BNPL process is relatively simple: customers make a purchase and choose the “buy now, pay later” option at checkout. The customer is then directed to the BNPL provider’s website to make an account. They will be required to submit some proof of identification and their preferred repayment plans. Once approved, the customer will then be redirected to your online store.

the process of buy now pay later philippines

Once the purchase is made, customers are required to make regular payments to the BNPL provider according to the agreed-upon payment schedule. These payments may be weekly, biweekly, or monthly, depending on the provider and the terms of the agreement. 

In some cases, there may be fees or interest rates associated with the BNPL agreement, so it’s important for customers to review the terms and conditions carefully before making a purchase.

To use the buy now, pay later service in the Philippines, customers can choose from a range of providers, e.g., TendoPay, BillEase, and Atome. These providers typically offer a quick and simple approval process, which allows customers to start shopping right away. 


Are buy now, pay later worth it?

It depends. Buy now, pay later may be worthwhile if you can finish paying off the item before the interest-free period expires and have no other debt. Nevertheless, it might be risky and expensive if you have additional debt or are unable to finish paying off the item in full before the interest-free period expires.

Why do people use buy now, pay later?

People use “buy now, pay later”services so they can buy things they otherwise might not have been able to. BNPL services typically offer customers a way to spread the cost of their purchase over a set period of time, often with no interest or fees.

Final Thoughts

Buy now, pay later (BNPL) is a growing trend in the Philippines and provides a convenient and flexible payment option for online shoppers. 

BNPL enables customers to make purchases without having to pay the full amount upfront and allows them to spread the cost over a set period of time. With quick and simple approval processes, customers can start shopping right away and enjoy greater financial flexibility. 

As eCommerce continues to grow in the Philippines, BNPL is likely to become an increasingly popular payment option, providing customers with greater convenience and accessibility in their online shopping experiences.

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Dennis Velasco

Dennis Velasco

Dennis Velasco is the CEO and Founder of Prosperna, an all-in-one eCommerce platform for Philippine businesses. As a technology evangelist at heart, Dennis is super passionate about helping MSMEs "level the playing field" with technology. Feel free to connect with him on Facebook and LinkedIn.

Dennis Velasco

Dennis Velasco is the CEO and Founder of Prosperna, an all-in-one eCommerce platform for Philippine businesses. As a technology evangelist at heart, Dennis is super passionate about helping MSMEs "level the playing field" with technology. Feel free to connect with him on Facebook and LinkedIn.

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