Rising use of buy now, pay later for meals, groceries and transport raises concerns over household finances, overdue debts and the risks facing young Malaysians.
STAND in line at any mamak restaurant near a campus or office tower at lunchtime and watch how people pay. Increasingly, some are tapping “Pay Later” on their phones to cover a plate of rice and a drink costing less than RM15. Few give it a second thought. And that is precisely the problem.
“Buy now, pay later” (BNPL) started as a convenient way to spread the cost of big-ticket purchases, such as a new phone or a pair of sneakers. In Malaysia, however, it has taken on a different role.
Data published by the Consumer Credit Commission, established under the Consumer Credit Act 2025, shows that BNPL is increasingly used for everyday expenses, including food and drinks, groceries, transport and other services.
When people have to borrow to pay for a meal, it is more than a lifestyle shift. It is a warning sign that household budgets are under growing strain.
The numbers tell a striking story. Outstanding BNPL balances stood at RM2.8 billion at the end of 2024, according to Bank Negara Malaysia’s Financial Stability Review for the second half of that year.
By the end of March 2026, the figure had nearly doubled to RM5.3 billion, based on figures provided by the Finance Ministry in a written parliamentary reply dated July 15, 2026.
Active accounts also surged over the period, rising from 5.1 million in December 2024 to eight million by March 2026.
Are we missing the bigger picture?
In a country of 34.4 million people, according to the Department of Statistics Malaysia’s estimate for the first quarter of 2026, BNPL has achieved remarkable reach in just a few years.
Deputy Finance Minister Liew Chin Tong, in remarks reported by Bernama, said around 40% of BNPL users are under 30.
Look closer and the picture becomes less comfortable. As at June 30, 2025, overdue BNPL balances stood at RM121.8 million, then Deputy Finance Minister Lim Hui Ying told the Dewan Rakyat on Aug 7 that year.
By the end of March 2026, the figure had climbed to RM181 million, or 3.4% of total outstanding balances. This is not a crisis, but the upward trend is worrying, especially for those who must repay their debts on modest salaries.
We are often reassured that BNPL accounts for just 0.3% of total household debt, suggesting there is little cause for concern. That figure comes from Bank Negara Malaysia, which says the risks remain contained, even as the rapid growth warrants close monitoring.
Viewed against the national balance sheet, that assessment may be reasonable. But it misses the point: the real concern is not how much BNPL debt amounts to nationally, but how heavily it weighs on the individuals who struggle to repay it.
The Finance Ministry reported that household debt stood at RM1.73 trillion at the end of March 2026, most of it in mortgages and car loans taken out by borrowers with steady incomes and payslips verified by banks.
Bank Negara Malaysia puts the median debt service ratio for household loans at 33%, while the impaired household loan ratio stands at about 1%. These are healthy indicators, and there is no reason to dispute them.
BNPL debt is different. It often falls on younger, lower-income borrowers who have little or no savings to fall back on. Medians and averages tell us what is happening in the middle of the distribution, but they can obscure the struggles of those at the margins.
For a 23-year-old earning RM2,500 a month, a few hundred ringgit owed across three BNPL apps can be far more damaging than a RM400,000 mortgage is to a couple earning a combined five-figure income. The burden is not just about how much is owed, but how much a borrower can afford to repay.
The BNPL illusion
It is worth understanding how the BNPL business works. Most plans charge no interest if payments are made on time.
Providers make money from fees paid by merchants and late charges imposed on customers who miss payments. This is not a criticism of the companies; it is simply how the model works.
The catch is that BNPL is designed to make spending feel effortless, with the cost becoming apparent only when something goes wrong.
That is why many users do not think of it as debt. With no interest, no lengthy forms to fill in and no banker sitting across the desk, it does not feel like borrowing. It feels like just another way to pay, no different from using a debit card.
Then a salary arrives late, an instalment is missed, late fees kick in, and a second app is used to repay the first. Before long, that RM12 lunch has become part of a growing pile of small debts that the borrower can no longer keep track of.
We have both seen this among students and young graduates. The stories are rarely dramatic. Nobody loses a house over a PayLater bill.
The consequences are small and quiet: a graduate who cannot say how much she owes because her debts are spread across four apps, or a young worker who puts off topping up his EPF savings because every payday goes towards clearing instalments.
Each case may seem insignificant on its own. Across eight million accounts, however, the cumulative impact is harder to ignore.
There is also a behavioural dimension to this, one that economists have studied for years. People tend to overvalue immediate rewards and underestimate future costs. When the pain of paying is delayed, we are more willing to spend. And when a price is split into four smaller instalments, it feels less burdensome than the full amount.
BNPL did not invent these habits. It simply made them easier to indulge, putting borrowing one tap away at online checkouts and, increasingly, at physical shop counters.
To be fair, the government has not been idle. The Consumer Credit Act 2025 (Act 873) was gazetted on Dec 31, 2025, and came into force on March 1, 2026.
Since June 1, BNPL providers have been required to obtain a licence from the newly established Consumer Credit Commission. The transition period for licensing runs until Dec 31, according to the commission and the Finance Ministry.
The way forward
The government has also launched the National Strategy for Financial Literacy 2026 to 2030, while the Credit Counselling and Debt Management Agency continues to offer free advice to those struggling with debt. These are meaningful steps in the right direction.
But a licence is only as effective as the rules that come with it, and the Commission is still developing those standards. That makes the next three months crucial. We urge it to get three things right.
First, all BNPL providers should be required to report to the central credit database, giving lenders a clearer picture of what borrowers already owe across multiple apps. Without this, affordability checks remain little more than guesswork.
A borrower may appear able to manage each loan individually while being in serious financial trouble when all those obligations are added together.
Second, affordability checks must be meaningful, not mere box-ticking exercises. If someone is repeatedly using BNPL to pay for groceries, that should trigger a review, not an increase in their credit limit.
Providers already collect extensive data on customers’ spending habits. They should be required to use that information to safeguard borrowers’ financial well-being, not simply to encourage more spending.
Third, late fees should be straightforward, capped and clearly disclosed in plain Bahasa Malaysia and English before a purchase is made, not buried in the fine print.
Borrowers should also be able to see all their outstanding instalments and due dates in one place, giving them a clear picture of what they owe and when payment is due.
None of this is an argument for banning BNPL. Used responsibly, it can be a useful tool and, for some families, a genuine lifeline between paydays.
Small businesses can benefit too, as BNPL may help them make sales to customers who might otherwise walk away.
The goal is not to take the bridge away but to ensure it does not become a trap.
Financial literacy has a role to play but we must be honest about its limits. No amount of financial education can solve the problem of a pay cheque that runs out by the 20th of the month.
Advising young people to budget better is sensible but it is not enough when their income simply cannot cover their expenses.
That brings us to the bigger lesson. When more Malaysians need credit to pay for lunch, the long-term solution goes beyond tighter regulation of lenders.
It means ensuring wages last until the end of the month, public transport remains affordable and food prices do not rise faster than incomes.
Until then, the next time you see someone splitting a RM12 meal into instalments, do not judge them. Ask why they need to.
Dr Zaki Ahmad is a lecturer and researcher in finance and banking at Islamic Business School (IBS), College of Business, Universiti Utara Malaysia (UUM). Prof Dr Selamah Maamor is the assistant vice chancellor of the College of Business and dean of IBS at UUM.
Comments: [email protected]
