Buy first and pay later – GRAB reminds you to still spend cautiously

Under the urging of the new crown pneumonia epidemic, e-commerce experienced a period of vigorous development last year. According to the e-Conomy SEA (2020) report, e-commerce in Malaysia increased by 87% in 2020 compared with 2019.

At the same time, “buy first and pay later” (BNPL), a payment method that provides consumers with the option of paying next month or interest-free instalments, is also becoming increasingly popular. According to a recent research report by GlobeNewswire, the total value of “buy first, pay later” commodities in Malaysia is expected to increase to 76.3% to US$479.3 million (approximately RM2.017.39 million) in 2021 by 2028 It will reach US$3.571.8 million (approximately RM1.503.22 million).

Grab PayLater

Southeast Asian e-hailing giant Grab also launched the latest payment method “PayLater”, which allows eligible consumers to purchase and pay in installments to manage their cash flow.

Through PayLater, consumers can flexibly pay in the next month and accumulate GrabRewards points, or pay in up to 4 interest-free installments. Of course, the benefits of choosing PayLater include:

●Payment on time is interest-free and does not charge additional fees.
●A series of complete functions, such as automatic deduction of bills, to help consumers master their expenditures.
●It can be used to consolidate the monthly Grab expenditures into one bill and pay it in the next month.
●No collateral cost.

Now through Grab’s PayLater, Grab users can easily manage their monthly budgets and pay seamlessly and securely for everything from electronics, clothes, household appliances to baby products.

To use PayLater for shopping and checkout, you only need to process it through the Grab app. Moreover, each transaction will have a set of one-time password (OTP), which is sent to the user’s registered mobile phone number. Every successful transaction, payment deduction or refund will be notified in real time. Consumers are also urged to activate their two-factor authentication (2FA) with Grab’s six-digit password or biometric or face ID to further protect their Grab account.

The operation of “PayLater” is very simple. Consumers use the Grab app to select “PayLater” during checkout, so that Grab will pay the merchants for the goods in advance. Consumers only need to pay a quarter of the Grab bill at the time of purchase, and the balance can be paid in installments so that consumers can get the goods right now.

In addition, all GrabPay users are protected by a fraud detection engine 24 hours a day, 7 days a week, which is supported by a strong internal fraud and security team. All personal user information is secure and complies with the Payment Card Industry Data Security Standard (PCI DSS). GrabPay is also regulated by Bank Negara Malaysia, so consumers can pay safely through Grab’s “PayLater”.

It’s more convenient to buy first and pay later
In fact, the concept of buy first and pay later is not an innovation. In the past, it was only provided by banks as part of a credit card product, allowing cardholders to pay for retail transactions in installments. This means that consumers need to apply for a credit card to qualify for the installment plan, and banks usually come with strict review and financial verification processes, which limits transactions.

And similar payment services without credit card, such as buy first and pay later, will prevail because it can give consumers more convenience. To use the “Buy First, Pay Later” service, you only need to simply register, without detailed application materials or financial documents. It is also cashless, so buy-and-pay users can easily pay from their bank account or credit card, and then pay in installments over 3, 4, or 6 months.

The arrears of payers on time are interest-free, and there will be no hidden interest charges due to delayed payments. Of course, if the user does not pay, then different providers may charge a fixed fee to reactivate the user’s account.

Buy first and pay later, you must also spend cautiously
Although buying first and paying later is a convenient choice for consumers, it is important to consume carefully and live within your means.

Here Grab provides you with 5 key points, so that you can ask yourself whether you should spend every time you shop:

1. Is it necessary or desirable?
   Needs can be divided into the following categories:
   – Basic necessities: daily necessities, such as water and electricity, rent, food, education, travel/vehicle maintenance, credit card bills, etc.
   – Special occasions: Eid al-Fitr, Lunar New Year, Christmas, Deepavali and other festive occasions, as well as special occasions, such as anniversaries or weddings, Father’s Day or Mother’s Day and birthdays, prepare gifts for loved ones.
   -Emergency situations: such as medical bills, frequently used electrical appliances that need to be replaced, car or house repairs, etc.
   – If it does not belong to the above combination, then it may be desired. For example, you want to buy a stylish mountain bike that has very good full suspension performance and improved braking accuracy. However, if you have to choose between buying a mountain bike or paying rent, then please call to stop before buying a mountain bike, because the rent should always come first.

Tip: Spend on what you need first, and spend more time thinking about what you want.

2. How much can I spend?
   After confirming that you have no monthly necessities, please do not buy that bike immediately! You still need to set aside some money as savings in case of emergency. Only after this, you will be able to buy the mountain bike of your dreams. It may be difficult for you to categorize the expenses of various necessities and savings, but a monthly budget can help you do this more easily.

Tip: It is recommended that you save at least 20% of your average monthly net income

3. Even if there is an installment plan, will it make me exceed my budget?
   Sometimes it’s easy to convince yourself to repay the purchase cost in installments. In this case, it seems more affordable for mountain bikes to repay in several months. In principle, this may be true. However, you also need to consider the need to deduct a certain amount every month for a certain period of time. You must also consider whether these installments will affect your monthly budget for the next few months when you want to purchase other necessities.
4. Do I have other installment plans?
   When you consider using an installment plan to pay for a product, you should also take other existing installment plans into consideration. You may allocate more money in the installment plan, resulting in insufficient balance to cover other necessary expenses and savings.
5. Do analysis often
   There are many buy-and-pay services available in the market, so it is recommended that you compare each option to find the plan that best suits your needs and monthly budget. Some services may provide cash back, bonus points or more manageable limits, so choose wisely!