THE growing popularity of Buy Now, Pay Later (BNPL) schemes in Malaysia has raised concerns among financial experts, who warn that the convenience of these loans could create a new generation of indebted consumers.
Transactions under BNPL require minimal documentation and bypass conventional credit assessments, making it easy for individuals, particularly young people, to accumulate debt that may become difficult to manage.
Unlike credit cards, which carry interest rates of 15 to 18 per cent annually along with penalties for late or minimum payments, BNPL schemes do not impose compounding interest.
Late fees typically range from RM20 to RM50 per missed payment, and users can choose repayment plans spanning from one month to up to 12 months, depending on the provider.
“BNPL does not charge compound interest, but the rapid rise in its usage exposes a new risk to household financial stability, especially among young and lower-income groups,” Harian Metro quoted Professor Emeritus Dr Barjoyai Bardai, an economist saying.
He noted that BNPL providers set credit limits independently without credit score approval, unlike credit cards which undergo a controlled assessment process.
Current data shows that BNPL transactions in Malaysia reached RM9.3 billion across more than 102 million transactions in the first half of the year.
Outstanding BNPL debt stands at approximately RM4.2 billion, with RM147.7 million classified as overdue.
While default rates remain relatively low on a macroeconomic scale, the figures highlight mounting financial pressures at the individual level.
Dr Barjoyai highlighted that roughly 70 per cent of BNPL users earn RM5,000 or less per month, and around 40 per cent are under 30 years old, signalling that the scheme is increasingly intertwined with the financial habits of younger Malaysians who are still establishing their economic foundations.
He warned that the underlying problem lies not in BNPL itself but in a financial system that allows overly accessible credit.
“It creates a culture where borrowing is seen not as a liability but as a normal part of daily life, assuming future financial capacity will always be sufficient,” Dr Barjoyai said.
The economist also emphasised the importance of the new Consumer Credit Act, which seeks to tighten regulations on BNPL providers, require valid licensing, and impose penalties for operators without legal approval.
He stressed that credit providers bear significant responsibility for setting limits and ensuring that loans do not entrap consumers.
“The entrenched culture of debt within conventional finance needs reassessment. Systems that prioritise maximising credit for profit create an environment where borrowing is constantly encouraged. Without structural reform, society will remain trapped in a cycle of debt,” Dr Barjoyai said. - December 28, 2025
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