Although I would love to have a credit card, I have second thoughts about actually getting one. I’m worried I might overspend.
However without a credit card, I often have to pay for big ticket items on the spot rather than having an option for installments. This is one of the reasons why some millennials even bother with a credit card in the first place.
Lim Kah Hoe understood this dilemma that millennials were facing due to this so he and his team established LaterPay in May 2018.
“The idea sprung up back then when I realised that installment plans are mostly available only for credit card holders. Debit card holders, on the other hand, are deprived of this privilege,” he said.
The Young Trio
LaterPay is made up of three co-founders with Lim Kah Hoe being the CEO at just 25. He has vast experience with the startup community, previously working at foodpanda, MaidEasy, Catcha Group and was also a consultant at PricewaterhouseCoopers.
The CTO of the company, Kelvin Lee who is 24 years old, was a mobile app developer from Agmo Studio. Lim Huey May, the 25-year-old CFO has advisory and banking experience with KAF Investment Bank Berhad and Ernst & Young.
The diversity in skill sets from the three founders helps to contribute to different areas which are vital to the growth of the company.
How To LaterPay?
Laterpay is a payment solutions app that allows users to buy now, get it now, and pay for it in 4 equal installments every 2 weeks with no additional interest charged.
Interested users will have to download the app and submit the required documentations for their Know-Your-Customer (e-KYC) system and credit risk analytics purposes to get themselves approved beforehand in order to make purchases using the system.
“To spend in online stores, approved users will browse in one of the merchants websites and let’s say your total checkout cart value in Lazada is RM300. You will then use our app to purchase a RM300 Lazada voucher code and apply the given voucher code in Lazada’s website,” explained Kah Hoe.
Users will then make the RM300 repayment every 2 weeks for 2 months which will be automatically deducted from their bank account attached to the app.
The interesting part is that there will be no interest fees charged to users, so it’s a zero percent installment fees.
One might wonder, how do they make money if they don’t charge users any fees? Instead of charging users, LaterPay charges merchants a commission fee for each transaction on their platform.
“Merchants will be rewarded with customers taking home with them a higher basket value. They would also be more likely to convert customers who have otherwise been forgone,” he added.
Making Sure People Pay
Customers who wish to use LaterPay will have to submit their documents such as a front and back photo of their National Identity Card (IC), latest one month payslip and connect their LinkedIn account.
“Submissions for the use of LaterPay will usually be approved within the span of between 5 minutes to a day. We have worked on developing our own risk analytics engine which include in-house scoring method to assess a customer’s repayment capability,” he explained.
The big question—what if a customer does not pay on time? For such cases, he mentions that customers will be barred from using the service the moment they miss the first repayment and the system will be enabled for them again once they resume the said repayment.
“We want to encourage a healthy habit among our users in terms of maintaining regular repayment behavior as it will contribute to their personal credit score as well. Nevertheless, customers are encouraged to reach out to us if they face any difficulties in repayment,” he said.
Building The Foundation And Looking Forward
“The biggest challenge that we have faced so far was the development of a good business model suited for the ASEAN market. We have pivoted many times for the last couple of months,” he said.
Fortunately, LaterPay had the opportunity to be a part of 1337 Venture’s pre-accelerator programme and made it to the top 11 finalists for the Alpha Startup: Fintech Edition batch. “Their support has helped us to come out with a more refined and holistic business model that can cater to the ASEAN demographic.”
“Another obstacle that we foresee in running LaterPay is the occurrence of fraud, and we already have plans to tackle this problem by infusing Artificial Intelligence (AI) and machine learning technology into our system once we have the capacity to do so,” he added.
For now they have launched a private beta of the app and have close to a few hundred users in a span of one week.
“We do see encouraging demand for this product which will bring mutual benefit to both the merchants and consumers. We hope to get more merchants on-board and for more widespread use of our service among customers in the near future,” said Kah Hoe.
Speaking about his future plans for LaterPay, he said that they will be launching their web version very soon. “We also aim to introduce the feature for users to shop in offline stores by Q4 of this year,” he added.
It would be very interesting to see more flexible payment options available for Malaysians as it could change the way we spend.
We wouldn’t need to rely on credit cards as much, and the best part is that there is no interest rate involved, so you only pay for what you buy. However do note that your spending amount will be limited and only increased based on your usage and repayment behavior.