Recent trends of operating business on e-commerce platforms have experienced significant changes and garnered attention following the onset of the COVID-19 pandemic.

Prior to the existence of e-commerce platforms, shopping transactions by consumers were done through conventional methods. Meaning, consumers have to visit the store physically to purchase goods.

Today, there are a lot of e-commerce platforms that are in the same market like Shopee, Lazada, eBay, Etsy, etc competing against each other.

To attract customers to utilise the platform, various marketing and business strategies are employed to ensure the continuity of the business.

One of the strategies employed and introduced is the payment method through ‘Buy Now Pay Later’ (BNPL).

This approach enables individuals to buy goods and delay payment until the next month or upon receipt of the goods. The payments can be done in full or in instalments.

The BNPL method has been widely accepted in Europe for quite some time and only garnered attention in the Asia market in the last few years. This method serves as the solution to the online purchase problem.

The BNPL method has also proven that credit cards can be found everywhere without the need for the physical card.

The differences between a credit card user and a BNPL user are that individuals who own a credit card have to have a job and a stable income for the bank to issue the card.

BNPL payment methods however are available to a broad range of users including college students, housewives, unemployed individuals and tech-savvy teenagers without considering the income status of the individuals.

BNPL on the surface is a method that offers conveniences and accessibility for its users.

However, BNPL also carries a potential risk as it can trap individuals into a bigger financial crisis slowly.

Usually, it is already too late once the individuals realise the financial crisis that they are in. Looking at both sides, BNPL has its advantages and disadvantages depending on how it is used.

On the positive side, the BNPL method offers benefits to its users encompassing ease in application because there is no specific eligibility (no age limit, specific qualifications and credit score qualification).

This situation will ensure an easy purchase made by consumers due to no interest or lower interest charged as compared to credit cards.

Despite its advantages, the BNPL method also has its disadvantages. The BNPL method tempts its users to impulsively spend beyond financial capacity.

This happens due to the individual believing that they are capable of paying back thereby increasing their debt capacity. This is also due to the amount of debt having been broken down into smaller amounts causing the individual to think that they are able to cover the financial debt, even though the financial ratio against income is increasing.

AKPK recommends a healthy financial ratio between income and debts of 45% or lower.

Other than that, outstanding payment or missed installments can be charged with additional fees, which also affects an individual's credit score.

In conclusion, it is crucial to equip oneself with the necessary knowledge in order to be a wise and prudent buyer before entering the market.

Common advice that I often share with people is we cannot blame or hinder a certain company from exercising business and marketing strategy to ensure the survival of their business.

However, as a consumer we have to be smart in every action taken when we utilise any of their facilities.

Being smart is referred to as being a consumer that is equipped with financial knowledge that is constantly updated.

Beside that, it is important to always keep emotions in check when managing the finances. Knowledge and a stable mind will ensure you to be a smart and prudent buyer.

AUTHOR, DR. NURUL ASHIKIN BINTI ALIAS is a Research Fellow, Ungku Aziz Center for Development Studies (UAC), University of Malaya.

This article is translated from the original Malay article. It is the author's personal view and does not necessarily represent the official view or position of RTM.