PETALING JAYA: The rising popularity of Buy Now, Pay Later (BNPL) schemes in Malaysia is raising concerns over financial stability, particularly among lower-income households. Centre for Market Education CEO Dr Carmelo Ferlito, who is also a visiting research fellow at Bank Negara Malaysia, said the rapid adoption to BNPL schemes is its appeal of allowing consumers to enjoy immediate gratification without the financial burden.
“The schemes are attractive because they offer the pleasure of consumption without the immediate burden of payment, at least for a certain amount of time.”
However, Ferlito warned that missed payments could lead to severe financial consequences. He said those who default on payments may face further economic hardship and difficulty in securing loans, such as home financing.
“The immediate impact depends on the terms agreed with the scheme provider. Generally, individuals face greater financial challenges and may struggle to access essential loans.”
One of the key concerns, he pointed out, is the absence of stringent credit checks in BNPL applications, unlike traditional credit cards.
“It creates a dangerous mentality linked with deferred payments, putting lower-income households at risk of financial instability.”
Previously, Bank Muamalat Malaysia Berhad chief economist Dr Mohd Afzanizam Abdul Rashid was reported to have said that Malaysians spent an average of RM1,735 per month, or RM57.83 per day, on e-commerce platforms last year.
Data from the Department of Statistics Malaysia showed that expenditure on e-commerce platforms grew by 15.4% annually, with Malaysians spending RM707.9 billion on online shopping in 2024. The rapid increase in digital spending reflects the growing reliance on alternative payment methods.
Ferlito emphasised the importance of enhancing financial literacy to help individuals make informed financial decisions.
“Education is the best way to manage BNPL risks. Regulation isn’t the answer. Banks are heavily regulated, yet crises still happen.”
With Malaysia’s household debt-to-GDP ratio already at worrying levels, Ferlito warned that BNPL could further contribute to overspending and debt accumulation.
“Yes, it is a growing concern. With household debt already at an extremely high level relative to GDP, promoting responsible spending is essential.”
Ferlito said while BNPL providers offer zero-interest transactions, aggressive market strategies could drive weaker players out of the industry once the boom subsides.
Despite the risks, he acknowledged that BNPL can offer financial flexibility, especially during crises. However, he stressed the need for responsible usage.
“We shouldn’t ban BNPL, but consumers must act responsibly. With more payment and financing options available, it is important for households and individuals to monitor their cash flow, keeping a close eye on expenditures.”
Ferlito also urged consumers to balance convenience with financial awareness to avoid long-term financial pitfalls.
Consumer Credit Oversight Board Task Force head and Bank Negara Malaysia assistant governor Abu Hassan Alshari Yahaya recently said 69% of users rely on BNPL as their sole source of financing.
He also said 73% are from the B40 group, earning less than RM5,000 monthly, while 21% are from the M40 group, earning between RM5,000 and RM10,000 a month.
