ENPL is the new BNPL – at least for the hospitality sector

Lau Pa Sat food court in Singapore, recently. Image by olli0815 | Bigstockphoto

Buy Now Pay Later (BNPL) was one of 2021’s biggest payments trends in Southeast Asia and India, and the hospitality industry will likely have its own version of it soon: Eat Now Pay Later (ENPL).

As economies recover from COVID-19, more people will be looking to spend on leisure activities, such as dining out and ordering food deliveries from high-end restaurants.

Millennials and Gen Z will lead the charge, as they are more comfortable with using digital payments platforms and credit products. Millennials are also the “foodie generation“, more likely to seek out new dining experiences as they advance in their careers and earn more money.

Business owners and restaurateurs are expected to latch onto this trend, with many exploring ENPL services to help boost sales.

Australian start-up Payo launched the world’s very first ENPL service in mid-2021, allowing customers to pay for their food in four interest-free instalments. There are now over 700 restaurants on Payo’s platform, with some of them reporting an increase of 50% in average order amount.

Southeast Asia will be a logical trajectory for companies like Payo. In 2020, Australian BNPL leader Afterpay announced expansion plans in at least four continents, including Asia. Afterpay then acquired Singapore-based BNPL EmpatKali, which had been focused on the burgeoning Indonesian market. The following year, Australian BNPL firm Zip also expanded into the region.

A report by Google, Temasek, and Bain predict that BNPL transactions in Southeast Asia will reach $92 billion in 2025, up from $23 billion in 2020. Meanwhile, another report by PwC, Rabobank, and Temasek forecast food spending in the region to grow to $8 trillion by 2030.

Just last month, popular food platform Zomato also announced it would roll out its own BNPL company in India as an alternative to existing BNPL options available on its app, all of which currently keep anywhere between 1-2% of the transaction value. Competitor Swiggy also announced joining the BNPL bandwagon.

However, ENPL, much like BNPL, can expect to face regulatory scrutiny due to potential misuse and fraud.

“Buy-now-pay-later creates debt and there will be a push from regulators to make it official as a debt, so they will have to [file] report[s],” said CredoLab’s co-founder and chief executive Peter Barcak, in an interview with DealStreetAsia.

In early January of this year, London-based company Zilch went under fire for promoting BNPL as a means to pay for cheap supermarket pizzas and other food items.

“They are preying on people’s fear of missing out, which could lead to a cycle of debt — and that’s all the more worrying at a time when living costs are set to soar,” said Scott Mowbray,  co-founder of money-saving app Snoop, in a conversation with The Financial Times.

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