Buy Now, Pay Later (BNPL) schemes are changing the way Malaysians spend, but is it for better or worse?
As of December 2024, a massive 5.1 million Malaysians are active BNPL users, according to Bank Negara Malaysia (BNM). That’s up from 4.3 million just six months earlier, a clear sign that this form of credit is becoming a financial norm, especially for younger, working-class Malaysians.
But with that explosive growth comes concern: Are users in control, or are they slowly sinking into debt?
Spending Surges to RM12 Billion in 2024
Last year alone, BNPL transactions hit 149 million, amounting to a jaw-dropping RM12 billion in total value, almost double compared to 2023.
The average transaction sits between RM70 and RM90, which may seem small individually. But multiply that by millions of users making frequent purchases, and the numbers skyrocket. What’s more, BNPL isn’t just for short-term payments anymore as providers are now offering instalment plans of up to 24 months for bigger purchases, signalling a shift in how people use credit.
BNPL’s Biggest Users
According to a large-scale survey by the Consumer Credit Oversight Board Task Force (CCOBTF), the majority of BNPL users (73%) come from the B40 income group, earning less than RM5,000 a month. Another 21% are from the M40 group, with incomes between RM5,000 and RM10,000.
Most users are young adults between 21 and 45 years old, many of whom are using BNPL not for luxuries, but for basic needs. In fact, 56% use BNPL to buy daily essentials, such as groceries, home items, and utilities. Only 12% admit to using it solely for non-essentials like gadgets or fashion items.
Even more concerning, 69% of users rely on BNPL as their only form of financing, unable to access traditional loans or credit cards. This signals just how deeply embedded the platform has become in the financial lives of lower-income Malaysians.
Is BNPL a Debt Bomb Waiting to Explode?
On the surface, the numbers may seem alarming, especially when outstanding BNPL debt in Malaysia has reached RM2.8 billion as of December 2024. However, Bank Negara is quick to point out that this amount represents just 0.2% of total household debt, for now.
Still, the potential risk is hard to ignore. As BNPL becomes more deeply rooted among financially vulnerable groups, regulators fear it could spiral into unmanageable debt. And while 88% of users reportedly pay on time, about 12% admit to late payments, mainly due to unstable income, other financial commitments, or insufficient funds. Less than 1% default completely, a relatively small but still worrying figure given the scale.
Why do Malaysians Love BNPL?
Despite the risks, the service remains wildly popular. The CCOBTF survey found that 95% of users are satisfied with their BNPL experience, while 98% say it’s easy to manage. Many users keep just one or two accounts and use BNPL between two to five times a month. For them, it’s not just about spending; it’s a way to stretch limited income across multiple needs.
Users are drawn in by the simplicity of the system, lower upfront costs, instant access to goods, and enticing rewards like discounts and cashback. Some even say it helps them budget better by spreading payments over time instead of paying large sums upfront.
The Regulatory Push
But with convenience comes danger, especially when there’s little oversight. That’s why the government introduced the Consumer Credit Bill (CCB) in Parliament on March 4. The proposed legislation aims to finally bring non-bank credit providers, including BNPL operators under a unified regulatory framework.
Once enacted, the bill will establish the Consumer Credit Commission, a body tasked with monitoring and licensing BNPL services and ensuring that consumer rights are protected. This includes preventing predatory practices, capping interest or penalty charges, and suspending accounts for users who miss payments.
Abu Hassan Alshari Yahaya, assistant governor of Bank Negara, stressed that without regulation, the rapid rise of BNPL could expose vulnerable users to financial harm and increase household debt risks.
Convenience Now, Consequences Later?
BNPL has clearly filled a gap in Malaysia’s financial ecosystem, especially for those left behind by traditional banking. But as millions lean on it as their sole source of credit, the line between “smart budgeting tool” and “debt trap” is getting blurrier.
There’s no denying that BNPL has provided access where traditional credit has failed. For many, it’s become an everyday necessity. But with that growing reliance comes responsibility. Is BNPL just a smarter way to pay, or a new way to fall behind financially?
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