The rise of Buy Now Pay Later in Thailand: why banks need to pay attention 


Thailand is one of the most exciting and fastest-growing retail markets in Southeast Asia, having been an early adopter of new trends driven by digital-first consumers, which has contributed to rapid e-commerce growth in recent years.

The mobile commerce market, led by mobile applications, is expected to grow at a compound annual growth rate of 12% to $25 billion by 20231. From travel to consumer electronics or fashion, a diverse range of online retailers is constantly identifying key profitability drivers while keeping offerings and payment options appealing and convenient for their customers.  

Financing at Point of Sale, a service also known as "Buy Now Pay Later (BNPL)" has grown in popularity as a win-win proposition for both retailers and customers. It not only helps in increasing revenue, but it also allows consumers to access goods they would not be able to afford otherwise.

This new financing option has been thriving in Thailand, and prospects show that it is here to stay: the country's BNPL Gross Merchandise Value is expected to reach US$ 15,818.1 million by 2028 (up from US$ 893.1 million in 2021)2. Now financial institutions must decide whether to join the BNPL herd with their own offerings or risk being left behind. 

The secret formula behind BNPL 

BNPL is a type of short-term financing that allows customers to buy products and pay for them in the future, at zero or low interest. Repayment terms vary depending on the BNPL provider, but typically include payment in full by the end of the month, pay-in-3 (three equal monthly payments) or pay-in-4 (four equal biweekly payments).  

This financing option is fast, convenient, flexible, and democratic. It is especially beneficial to young consumers who are digitally savvy and with limited financial resources (entry-level jobbers or students) or those who do not have a bank account or do not qualify for credit or loans. They feel they do not need to access credit with BNPL; they simply defer payment. Additionally, they are also given the ability to try out a product at no expense at the time of purchase. 


BNPL has numerous advantages for retailers and merchants. Those who included this financing option in their business strategy saw higher sales conversions and larger basket sizes. 41% of global consumers are more likely to buy in a store that offers BNPL and many are already benefiting. As an example, after introducing Klarna, one of the leading BNPL-focused fintech to its store, the UK fashion retailer Hype saw a 38% increase in online conversions3. 

It's now up to Thai banks 

Fintechs were the first to champion BNPL, particularly through mobile apps or collaborations with online platforms to provide this type of embedded finance (which is the seamless integration of financial services adopted by non-financial companies).  

Covid, the e-commerce boom, and economic pressure, on the other hand, have transformed BNPL into a growth engine for e-commerce businesses and lenders, including banks. While a handful of Thai banks are exploring BNPL solutions, the rest may lose out if they do not act fast: according to research, BNPL fintechs have already diverted US$ 8-10 billion of annual revenue away from banks globally4. This does not have to be the case, as 70% of BNPL users would be willing to use BNPL offerings from their banks if they were available5. 

With the massive potential for continued growth, Thai banks must approach BNPL strategically and decide whether and how they will play a role in this new business line. Making it part of their offering will be critical, as BNPL is rapidly eclipsing traditional consumer finance models, such as bank credit or personal loans, and even, in some cases, debit cards. BNPL will allow banks to improve their merchant relationships and value proposition, allowing them to capture a greater share of wallets through cross selling and customer acquisition.  


The future is composable 

Banks and retailers seeking to introduce BNPL offerings should choose partners which give them a head-start by leveraging their flexible technology solutions and domain expertise. Mambu enables its customers to build an end2end BNPL solution in a few weeks using Mambu's core product engines in combination with a composable framework for integrating best-for-purpose third-party providers. Mambu provides its customers with the technology to quickly and easily access financial products. 

By Pham Quang Minh, General Manager at Mambu Thailand 

The rise of Buy Now Pay Later in Thailand: why banks need to pay attention