By Ashley Ow

From Atome to Hoolah and OctiFi, there’s now a slew of ‘Buy Now Pay Later’ services on the market. Similar to credit card 0% interest instalment plans, these services let you split big ticket purchases into multiple small payments. How do they work, and how would they affect how you buy things?

Whether you’re shopping online or in person, you can’t help but notice new methods of payment. Companies like Atome, Hoolah, OctiFi, and Grab offering ‘Buy Now, Pay Later’ (BNPL) payment models. You might wonder how these methods of payment compare to paying with credit cards, but on mobile. And with the ease of transaction through these types of mobile payments, how would it affect consumer habits?

According to a 2021 finding, an estimated 1.1 million of the population, or 38% of Singaporeans, have used a BNPL service. And over a quarter of those who did (27%) suffered financial hits with the service.

How it works for consumers

As similar as it sounds, it’s not the same as paying with credit cards. So how does paying later with your mobile phone compare to paying with a credit card?

In both cases, the cost of purchase will be split into several instalments with a fixed amount of payments over a set period of time. BNPL consumers would pay the first instalment upon purchase, and the remaining amount is essentially ‘loaned’ from the BNPL provider. It’s repaid in instalments in the subsequent payment period. It’s often interest-free.

Hoolah, OctiFi, and Atome split their payment into three instalments, while Grab splits the amount into four.

The main difference between the BNPL model and paying with 0% interest credit card, besides paying with a mobile phone, is that you get to bring home whatever it is that you’re paying for immediately. It also doesn’t affect your credit score. That means people with low credit or unable to get a credit card would gain access to these forms of payment as well.

Photo by on Unsplash

How BNPL companies earn money

With the interest-free instalment model, BNPL companies like Grab, Hoolah, and Atome earn money not from the consumer, but from the retailer. These companies earn between 4% to 9.5% for each purchase, promising an increase in sales with the merchants. This is because they provide accessibility to payments from a large range of audiences, especially as Generation Zs tend to shy away from credit cards (if anything, the youth are all about apps). This amount is typically higher than that of credit cards as well, which varies between 2% to 4%.

Advantages and Disadvantages

It may seem like an easy way to shop and reduce costs upon payment. However, like all things, there are advantages and disadvantages to this payment model.


  • Customers can shop with easy, instant approval without the companies checking your credit reports for several considerations. These include checking how often your debts and bills are paid on time, how much credit you’re juggling, and how long these credits have been managed.
  • Easy accessibility even for those without credit cards
  • Interest-free purchases with the remaining amount paid in instalments clearly stated
  • Easily integrated into many shopping apps and stores
  • Helps make any purchase more affordable


  • Can easily cause overspending in consumers since the amount spent is seemingly small upon purchase
  • Not all retailers accept the BNPL payment model
  • Potential hidden costs such as late payment or missing payments lead to suspension in accounts and additional payment charges. It can affect credit scores past the interest-free periods.
  • Users can easily incur big amounts of debts upon late or missing payments
  • Return policies can get confusing for customers. In some cases, the customer might still need to keep paying the instalments until the return and refund is verified with both the retailer and the BNPL provider.

How this ‘pay later’ affects consumer habits

With time, consumer habits could be shaped by the ease of transaction with the buy now, pay later payment model. Some scenarios that could potentially happen are overspending, inclination towards buying pricier items, and regretting expensive purchases. In a recent survey, it’s shown that 57% of BNPL users regret an expensive purchase, with half of this number of users being behind on payment.

In the latter scenario, it seems fairly easy to incur additional debt with late or missing payments on top of the pricey instalments that come with the purchase. For instance, Atome suspends the account upon a missed payment and imposes a $20 admin fee. An additional $10 is charged if the outstanding payment is not paid within a 7-day window. Grab, on the other hand, imposes a $10 fee to reactivate the suspended PayLater account. If users fail to make further payments, the debt will be reported to debt collecting companies and affect the users’ credit scores. 

Buy now and pay later?

Both BNPL and credit card payment services offer customers the opportunity to buy more and give merchants access to more customers. If history is to repeat itself, would we see a trend of rising BNPL debt the way we see credit card debt (which was S$371.39 billion in July 2021 in Singapore) – but among a younger demographic? How will BNPL customers’ debts affect household debt?

With the rise of these payment models, it’s important to read the fine prints as well as terms and conditions before committing. While the collection of points, rewards, and vouchers that come with these payments can be attractive, there are as many as 783,000 Singaporeans, or 27% of the population, who have faced financial difficulties as they use the Buy Now, Pay Later model.