In a rapidly growing digital economy, the Buy Now, Pay Later (BNPL) payment model has become one of the most prominent financial innovations globally. BNPL allows consumers to make immediate purchases and pay for them in installments, often interest-free. This feature not only appeals to younger generations and those with little credit history but also opens up new opportunities for small merchants to attract more customers.
According to the Consumer Credit Oversight Board (CCOB), Malaysia recorded 3.7 million active BNPL users in 2024, most aged between 21 and 45. Over 700,000 merchants accepted BNPL, especially in the food, restaurant, retail, and transportation sectors. That same year, 149 million transactions worth RM12 billion were recorded, doubling the figures from the previous year.
As BNPL grows rapidly, an important question emerges: How do we preserve its benefits without compromising consumer well-being? The answer is not to stifle or overburden innovation but to promote transparency and responsible usage.
The Consumer Credit Act 2025 is expected to be enforced by the end of this year. One of its key elements is the requirement for BNPL providers to share consumer credit information with credit reporting agencies before a transaction is approved. The objective is clear: to prevent overspending and ensure responsible lending practices.
Far from helping consumers shop more wisely, this rigid credit reporting requirement risks hurting consumer interests. By adding unnecessary bureaucracy, the regulation may lead to slower and more restrictive application processes, less seamless shopping experiences, and increasingly complicated terms. Users who previously enjoyed fast and simple access to BNPL may now face lengthy credit assessments, comparable to bank loans, even for small purchases.
More worryingly, consumers may lose access to choices. Only large-scale providers will be able to bear the cost of data reporting and compliance. At the same time, smaller players — typically offering more flexible and user-friendly services — may be forced to scale down or exit the market. As a result, consumers will be left dealing with only a handful of companies, likely facing less competitive terms. When competition is curbed by bureaucracy, consumers bear the cost through fewer choices, hidden fees, and reduced innovation.
As of December 2024, there were twelve BNPL providers in Malaysia, including four that offer Shariah-compliant options. However, the market is heavily concentrated: three major players — SpayLater (Shopee), PayLater by Grab, and Atome — account for over 95% of active users, transaction volume, and value, while less than 4% is shared among all other providers. This shows that Malaysia’s BNPL market is already highly concentrated. Any regulation that disproportionately burdens smaller providers will only strengthen the dominance of large players and make it harder for new competitors to emerge. For consumers, this means fewer offers, reduced flexibility, and the risk of terms being set against their favour.
When implementing such laws, we must be cautious not to copy wholesale from the traditional banking framework and learn from the failures of other regulators. In Europe, for example, Article 10 of the consumer credit directive requires lenders to provide highly detailed pre-contractual information using the Standard European Consumer Credit Information (SECCI) form. This includes credit type and duration, drawdown conditions, full contact details, and total cost. On paper, this may appear transparent, but in practice, it creates artificial barriers to access and competition, significantly increasing the risks of data breaches due to centralized storage of personal information.
Instead, we should focus on practical and user-friendly transparency, not just technical accuracy that consumers struggle to understand. What matters most is that users know how much they owe, when it’s due, and the consequences of late payment. This can be achieved through clear summaries, automated app notifications, and well-designed information displays.
Transparency can also be enhanced through innovative approaches, such as in-app affordability checks, spending alerts, or reward systems for on-time payments. Such initiatives help users manage their finances more responsibly without needing burdensome external intervention.
In addition, financial education must play a central role in supporting transparency. Users should be empowered with the tools and knowledge to make informed decisions, not overly protected to the point of losing autonomy. BNPL regulation should be a tool that empowers, not deceives.
In Malaysia’s increasingly open digital economy, BNPL is vital in stimulating consumption and expanding market access for small businesses and local entrepreneurs. But if too many restrictions are imposed, the opportunities and economic value of BNPL may be lost, and once again, consumers will be the ones who suffer.
In conclusion, BNPL is a form of financial innovation that should neither be dismissed outright nor overregulated. What is needed is an innovative, balanced policy approach — one that promotes transparency, consumer understanding, and room for innovation, not technical compliance for its own sake. Only then can we build a financial system that is dynamic, fair, and truly works in the best interest of everyday users.
