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One question I’ve always had about BNPL companies is how they fund themselves.

After all, their service can often seem too good to be true. If they’re offering all these benefits to users such as discounts and a 0% interest fee, how are they making money in the first place?

To answer this, I reached out to several BNPL companies that are active in Malaysia, and ultimately got responses from three—Split, Atome, and myIOU. Here’s what they said.

Relying on merchants

Turns out, the answer is quite straightforward across our interviewees’ responses. Dylan Tan, the co-founder and CEO of Split, said that the Malaysian company does not charge consumers anything, not even late fees or admin, processing, and application fees.

“Our revenue model hasn’t changed from the start,” Dylan further explained. “100% of our revenue comes from merchant success fees, which is a percentage commission that merchants pay us on all the sales that we process.”

Dylan (top centre) and his team / Image Credit: Split

myIOU also charges service fees to merchants that are using its services, according to Gwen Khor, myIOU’s head of marketing. The company doesn’t charge customers any interest fees.

Atome said it also does not charge any interest for late payments. Instead, customers who miss payments will simply have their accounts suspended immediately.

“Our business model charges merchants a small commission per transaction,” Gary Yeoh, the general manager at Atome, said.

He continued to explain, “In return, our merchants can expect a larger average basket size leading to more sales, acquiring more new users because they are meeting the demand of a generation of customers who are looking for more payment options, flexibility, and accessibility in a secured environment.”

This is amplified by Atome’s efforts to collaborate with its merchants on marketing campaigns and co-branding initiatives such as its loyalty programme, Atome+.

“To reiterate, we rely heavily on the success of our merchant partners and the ability of our customers to make timely payments and repeat usage,” he explained. “The equation will not be right for us as a business if consumers are unable to pay their dues.”

But who’s really paying?

It seems like Atome, Split, and myIOU mostly rely on the success of merchants in order to remain operational themselves. Fair enough.

However, if merchants are paying such fees, wouldn’t they simply be passing along those fees to consumers, perhaps by hiking up their products’ prices?

The three representatives disagreed.

“I don’t believe [this is true] in Malaysia,” Dylan said. “From our experience, the incremental revenue merchants gain from BNPL tends to outweigh the extra commission fees; raising prices would simply drive customers away.”

According to Dylan, many of Split’s merchants see BNPL as a customer acquisition channel that’s cheaper than traditional acquisition channels on a cost-per-acquisition basis.

Image Credit: Split

“Similarly, credit cards charge higher fees to merchants compared to other payment methods—did prices go up when credit cards were first introduced?” he pointed out.

“Arguably not,” he answered. “But consumers are definitely paying more with annual credit card fees, compounding interest, and late charges (which we don’t have).”

To Dylan, it’s not in a merchant’s interest to make customers pay more, and consumers are the ones who ultimately decide with their wallets, after all.

Gary said that Atome does not work with merchants to pass on additional fees to consumers on their end. Of course, this doesn’t equate that merchants aren’t doing such.

“We are also very careful and selective when onboarding merchants,” Gary added. “We conduct regular reviews and check-ins with our merchant partners. Our Atome customer service is also on alert of such practices when reported by customers.”

Optimising for the future

Regardless of price hikes, though, financial experts have been wary of BNPL companies, especially because of their unregulated nature.

In fact, we’ve spoken to a few Malaysian financial bloggers about the subject, and many of them advise against using BNPL services.

However, some BNPL companies such as Split seem to be introducing certain features that might help consumers with their finances.

“We’ve refocused our BNPL business for profitability rather than growth, and in parallel, we’re pioneering a new debt-free affordability tool called Save Now Buy Later (SNBL),” Dylan shared about Split’s upcoming plans.

With SNBL, customers are rewarded with discounts for saving up monthly to buy in the future from a service’s SNBL merchants.

On the other hand, myIOU has recently launched a co-branded VISA prepaid card that rewards loyal consumers. With the card, consumers can spend at any merchant that accepts VISA and convert the purchase into a BNPL transaction afterward.

According to Gwen, this is currently in the pipeline and pending BNM approval.

myIOU was launched by IOUpay, a publicly listed Malaysian fintech company on the Australia Stock Exchange (ASX)

Meanwhile, Atome is expanding its service beyond its “pay in 3” programme to offer more deferred payment options. Gary also said that the company is expanding its verticals to start offering F&B, hospitality, travel, automotive, and hypermart products for its users.

“At the same time, we also want to enhance the customer experience and promote responsible use of BNPL,” he shared.

According to him, the way Atome has done this includes adding a Malay language feature and launching a iBNPL partnership with PayHalal, a Syariah-compliant payment gateway that allows riba-free, 0% interest payment.

Did you know: In Islamic finance, riba refers to interest charged on loans or deposits. Religious practice forbids riba.

“Unlike credit cards where customers can ‘roll over’ outstanding balance and are charged interest, Atome customers are prevented from further usage until they settle outstanding payments,” Gary added.


While the BNPL companies we spoke to monetise from the merchant’s end, some BNPL models do charge interest fees on late payments.

Thus, it’s smart to always do your own research on a service before utilising it, and of course, there are recommended practices to observe when deciding to use a BNPL service.

Previously, we spoke to Malaysian personal finance bloggers to learn their recommendations and words of caution for the usage of BNPL, and shared our findings here.

  • Read more finance-related pieces we’ve covered here.
  • Read more BNPL articles we’ve written here.

Featured Image Credit: Split / Atome

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Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.

© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)