Malaysian Consumers Love Instalment Plans. Can Business Owners Too?

With the retail environment becoming increasingly competitive, businesses are struggling to stand out – or make ends meet for that matter. When faced with the question of “How can we improve sales?”, it’s safe to say that the majority of business owners in Malaysia will look towards their sales & marketing team for answers.

But how many think towards changing their payment method instead? We’ll answer that for you – not many.

Despite instalments having been proven to be a competitive differentiator for businesses and having a direct impact on whether a business makes a sale or not, opting for flexible payment methods don’t come to mind for many. In other words, we as business owners have to know how to look at our services/products from the customer’s point of view.

Instalments to combat every customer.

At Curlec, we’ve seen firsthand what implementing instalment plans using Direct Debit can do for businesses. Sales conversions prove significantly easier when you offer “on-the-fence” prospects the option of splitting up seemingly huge figures into monthly payments. Especially if it’s an automated option and they don’t have to get their hands dirty!

But wait… Are instalments the same as Direct Debit?

In short, no. An instalment plan is a series of invoices over a period of time in which the customer honours an obligation to pay back the merchant for a good or service. The way Direct Debit fits into the equation is by being the payment method in which these obligations are fulfilled. Other methods include cash, cheque or bank transfer but are less convenient for merchants to receive.

A look at how the “BNPL” scene ties in.

“BNPL” stands for “Buy Now, Pay Later”, a term for flexible payment methods where consumers can choose to pay for products or services via in-store credit first. A whole slew of companies are already hopping onto this scene!

“Buy Now, Pay Later” in Malaysia bridges the gap between consumers who are unable to pay for a product/service yet, and merchants who desperately want to make that sale. Malaysian consumers – younger ones who are more prone to impulse-buying in particular, will be able to pay for larger-ticket purchases even without a credit card! This includes the unbanked, who in 2017 made up for 8% of the population.

As we begin to see this rapidly growing movement reach the shores of Malaysia, we can be sure of one thing – The arrival of a time of big spending.

Going deeper into the picture, Malaysian businesses can expect an increase in overall sales not just due to an increase in the purchasing power of Malaysian citizens, but also because being able to buy now and pay later allows them to smoothen their costs and reduce the immediate financial burden.

Remembering too, that the average Malaysian salary this year has been increasing at 3% compared to the previous year. Compounded, this will eventually result in the future burden of consumption from today gradually declining to negligible amounts.

“A rich country is one where its people have high purchasing power, not just high salary rate or wage.” – Former Prime Minister, Tun Dr Mahathir Mohamad.


The key takeaways from this? Malaysian consumers are going to be spending more and spending big.

As a business, providing the option for consumers to pay via instalments means you can leverage on this wave of big spenders. Because ultimately, we’re still the typical thrifty Malaysian. Being more inclined to make larger-ticket purchases doesn’t necessarily mean we want to pay for it all at once.


Direct Debit deals with the difficulties.

The sad truth is that even for businesses who are already offering instalment plans for their customers, results are not always guaranteed. There are two main reasons as to why this could be happening.

1. Most instalment plans only cater to credit card holders

Consumer attitudes towards cashless payment methods are telling – they would much rather use their debit card or bank accounts for instalments here in Malaysia. The problem here? Most instalment plans require a credit card, an item only around 20% of the population have. That’s quite a hefty number of potential customers a business could lose out on!

How Direct Debit helps:

Don’t get confused! Direct Debit = A method of collecting recurring payments automatically from a bank account, not credit/debit card.

But…why collect payments from bank accounts instead? To oversimplify it – lower transaction fees, lower failure rates and less admin work required. Our article here does a full-on comparison!

So that 80% of the population left with no credit card? Direct Debit for instalments makes sure you’re not leaving them out of the equation. No credit card? No problem.

2. Manually tracking each customer wastes time and resources

For most SMEs, enabling traditional instalment plans isn’t the most feasible. It’s fine when your customer base is still small, but once you hit the thousands or even just the hundreds, keeping track of them is next to impossible. Whose payments are overdue, whose payments failed… whether or not you’ll even be able to contact them is a whole other matter.

How Direct Debit helps:

Direct Debit for instalments automates the process and reporting of collection for merchants. This is done during the initial sign-up, when the merchant and customer will agree on the amount, date and frequency of the payment. (Yes, it’s completely customizable!)

After that, payments are automatically pulled into the merchant’s account. So instead of having to chase after customers with outstanding dues every single month, merchants can rest at ease knowing that the payments will already be in their bank account the next time they check it.

Curlec Boosting Businesses

So if by now, you still haven’t jumped on the instalment bandwagon – Get in touch with us here! We’ll help you find out how your business can incorporate, or improve upon your current instalment plans with Direct Debit!

Keen on reading more about consumer financing in Malaysia? Check this out!

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