Shariah-Compliant Buy Now Pay Later Services Have Arrived In Malaysia, Here’s How To Figure Out Which Is Which

There are many “Buy Now, Pay Later” services out there, and it is very convenient. But is it worth the risk?

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Let’s say you want to buy a new iPhone 13, but you don’t have enough money or want to borrow it. What can you do? Well, you can just use the Buy Now, Pay Later (BNPL) service. It is super convenient to get what you want now and not have to worry about paying for it immediately. If you are concerned about which BNPL is Shariah compliant, we will answer your question here.

How BNPL works? Just signup, buy what you want and pay in installments later.

Lets start off with Shopee and its SPayLater. Shopee says their BNPL is:

SPayLater is permissible from the Shariah perspective. It is consistent with the Shariah permissibility on Bay’ Bithaman Ajil (deferred payment sale), where the parties in a sale transaction agree to make the payment in a deferred basis.

The facility is certified as Shariah Compliant by Amanie Advisors (“Amanie”), a global Shariah advisory firm and a registered Shariah advisory company with the Malaysian Securities Commission (SC).

Shopee Malaysia

Shopee’s BNPL service offers two ways to make payments: you can spread out your payments over two, three, or six months, or you can pay the entire amount at once.

Although there is no interest charged on the installment choices, a processing fee of 1.25% of the order total is charged. If you pay after the due date, there will be a penalty of 1.5% of the transaction amount.

(credit: Fintech news/ Unsplash)

Split, a Malaysia and Singapore-based fintech company became the first BNPL operator to have their offerings certified Shariah-Compliant by Masryef in Malaysia. Masryef is a Malaysian advising firm that specialises in Islamic banking and finance and has 50 years of combined experience.

Split is the only provider of BNPL services that waives late payment penalties. Instead, they said that it would, subject to “verification,” work out a payment plan that is suitable for the user who is unable to pay on time on a case-by-case basis.

Split promises that their BNPL has zero fees including no interest, late fees or processing charges and the users will only pay for the price of their order and nothing more.

(credit: Digital News Asia)

The next company to offer a Shariah-compliant BNPL is PayHalal. This company is also certified by Amanie Advisors. The same Shariah advisory firm that certified Shopee’s SPayLater. PayHalal is partnering with Atome, another BNPL company, but they are not Shariah-compliant, hence the collaboration with PayHalal.

PayHalal promises buyer that they can pay in installment with zero interest and without hidden charges.

The Rest of the BNPL Players in Malaysia

(credit: Malay Mail)

Atome has operations in Singapore, Malaysia, Indonesia, Hong Kong, and Mainland China among other places and the Singapore-based company is considered today’s largest BNPL platform in South-east Asia. It boasts affiliations with more than 2,000 brick-and-mortar and online retailers.

According to Malay Mail, users of all economic levels agree that it is quite simple to sign up for Atome. All you need to do is be at least 18 years old and spend at least RM10 on a single purchase. Three months will pass between installments.

Atome makes money by charging businesses a specific fee rather than charging interest to users. Additionally, users will be charged an RM30 late payment fee.

While individuals without credit cards are only allowed to spend up to RM1,500, those who do can spend up to RM5,000.

(credit: Malay Mail)

Fave, a company that was founded in 2015, collaborated with retailers to offer reduced goods and services using something akin to a digital coupon. In essence, merchants use the platform for free advertising.

FavePay Later was finally launched in 2021 thanks to a large number of merchants on its network that allowed Fave to use its technology for an internal BNPL payment service.

The duration of FavePay Later’s installments is three months. Even while joining up for the service seems to be quite simple and doesn’t require a good credit score, the amount of credit a user can use is determined by what the company refers to as “user evaluation.”

After seven days, Fave charges 1.5% of the amount that the users still owe for each late payment.

(credit: Malay Mail)

hoolah is a Singapore-based BNPL platform and they also offer an installment tenure of three months and it is interest-free. But, the charge for late payments is scaled depending on the cost of the products being purchased.

According to Malay Mail, orders under RM100 would be subject to an RM7.50 fee. The fine is RM25 for transactions between RM100 and RM499.99. The penalty cost for every transaction of RM500 or more will be RM75.

(credit: Malay Mail)

Everyone is familiar with Grab, and they also provide their own Grab PayLater which was launched in 2019.

Grab allows you to divide a single payment into either four installments or the full amount in the next month. To use Grab PayLater service, users must be above the age of 21, you must be a “silver tier” member, which means you must first earn 200 GrabReward Points.

Additionally, users need to have used the app for a minimum of three transactions in the previous month. For every missed payments, Grab would immediately freeze a PayLater account. To reinstate their account, the penalised user would have to pay RM10.

Should You Use BNPL services?

BNPL is much simpler to apply for and obtain than credit cards. Only use if necessary; if not, you can always save some cash and purchase it later, perhaps at a discount.

Similar to credit cards, BNPL can quickly cause you stress and cost you more money than straight purchases if you don’t practise sound financial discipline.

So ask yourself, do you need this thing now or you can buy it later?

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