Private credit fuels a 'buy now, pay later' lending boom in Asia

MARIA HAZEL REGALADO, a 48-year-old mother of four in the Philippines, needed a computer last year so she could work from home. Ms. Regalado, who helps manage rental properties in Australia, didn't have the cash or a credit card. A friend suggested she get a "buy now, pay later" (BNPL) loan from Billease, an online lender.

- MARIA HAZEL REGALADO

The computer cost P37,999 ($664), almost as much as Ms. Regalado earns in a month. Still, Billease approved her application within minutes. She agreed to make 12 monthly payments of P4,493 each, including principal and interest. The effective annual rate: 42%. "At first I was hesitant, but I didn't have much choice," says Ms. Regalado, who lives in southern Manila and had four installments left as of mid-July. "I really needed that laptop."

Lenders worldwide last year made $334 billion in BNPL loans, five times their value from five years before, according to technology analysis and consulting firm Juniper Research Ltd. In the US, merchants typically pay any fees, so customers get no-interest loans as long as they keep current. But the developing world has a different model: charging eye-popping interest rates to cash-strapped borrowers.