THE early glow of “buy now pay later” (BNPL) payment schemes has dimmed significantly over the past two years, with players pulling out of the space and digital banking opportunities opening up.

At the start of March, customer-reward platform ShopBack announced that its BNPL offering, PayLater, would be shuttered in Singapore and Malaysia by Mar 23. Even in emerging markets like Indonesia, where BNPL was thought to tap a market lacking access to credit, Bukalapak became the latest to pull out; its BNPL offering, BukaCicilan, discontinued on Feb 29.

Persistently high interest rates have battered the sector. With the cost of funds having risen significantly, BNPL players’ offering of what are essentially interest-free, short-term loans in developed markets has put the squeeze on many of them, leading them to scale back.