Paylater is a digital payment service that is increasingly in demand by the public. According to a survey by the Katadata Insight Center (March 2022), its use in e-commerce increased from 28% in 2021 to 38% in 2022. This growth surpassed other payment options in the past year, including credit cards. The consumer application has also been designed in such a way that the paylater payment becomes a more effortless method.
For consumers, paylater services provide credit later with a more efficient administrative mechanism. The use of a paylater is quite simple, unlike credit cards, which require the owner to submit an application to the bank accompanied by a rigorous selection and analysis process. Apart from the relatively smaller credit value and tenor, paylaters also use fintech technological innovations.
One of the technologies is used for credit scoring analysis. If banks rely on SLIK or BI-Checking, which uses historical data from banking transactions, many paylater technologies will utilize alternative credit scoring technology. Paylater can use data from various sources to assess a person's credit quality. This makes the administration process much faster — especially with implementation technologies such as machine learning and artificial intelligence.
In addition to the convenience of the initial administration process, Paylater now offers a more efficient payment (refund) process thanks to the supporting technology. The following is a discussion of the paylater mechanism for consumers and business owners.
Paylater payment method for consumers
When a consumer submits a credit payment through a paylater, they will get the option to divide the payment tenor into several parts (months). After the successful purchase, the platform will bill the consumer the following month. There will usually be a service or platform fee that will be charged to the consumers in addition to the required installments and interest.
The next step is that consumers will make regular payments following the specified period. According to NielsenIQ data, several options are most widely used for payments to digital platforms, including e-money, virtual accounts, and mobile banking.
Regarding the mechanism, it is usually done manually. Consumers will get a particular code that can be used to make payments through their banking application. If the relevant paylater platform has an e-wallet, the user must first select an amount of money to be debited according to the credit payment that must be made.
Automate and streamline paylater payments
The organizers can provide more accessible options regarding paylater payment methods for their customers. One of them is by utilizing the capabilities of the Open Finance service. An Open Finance platform provides the technological infrastructure to perform certain functionality within an application, allowing developers to deliver new features without having to develop from scratch.
Regarding the paylater payment method, the organizer can provide the automated payments feature. This allows consumers to automate recurring payments that must be made. The Open Finance technology that can support this process is Recurring Payments.
It works like this: When users have registered and submitted a paylater application, they will be presented with a dashboard to connect their financial accounts to make automatic payments. Users can connect e-money applications, credit/debit cards, and bank accounts. Next, the system will automatically debit payments that must be made according to the agreed tenor range.
The Recurring Payments service by Finantier can provide up to 99% efficiency in costs incurred due to transactions. In addition to providing convenience in only one setting, Recurring Payments also allow businesses to reduce the cost of existing services. From the consumer side, they will also get direct benefits from a relatively minimal bill value.
The automated payments model can also be seen as a preventive measure by businesses to reduce risks such as default—while providing convenience for its consumers.
The implementation of the Recurring Payments platform is through the Open API. The service is linked directly to the developed paylater application. So, from the UI/UX side, users can still be kept efficient following the developer's design.