COMMENT | Unregulated 'Buy Now Pay Later' schemes push more into debt

COMMENT | Buy Now Pay Later (BNPL) schemes are rapidly growing in Malaysia. Under this scheme, when a product or service is purchased, the purchaser pays a down payment and settles the rest of the payment through instalments over a certain period, usually over 3 months. Usually, no interest is charged.

Currently, there are an estimated 8 major BNPL players in Malaysia. Being non-financial institutions, they are not regulated by Bank Negara Malaysia. Thus there is no meaningful oversight of their activities and they are not subject to laws that can protect consumers against unfair deceptive or abusive practices.

The benefits to consumers are that it allows them to break their purchases into manageable payments and benefit from the zero percent interest rate. Furthermore, often consumers do not need a good credit score to qualify thus there is often a lower entry barrier to BNPL schemes than credit cards or bank loans.

In Malaysia, the basic requirements to qualify for the BNPL scheme is that one just has to be a Malaysian citizen, above the age of 18, have a debit card, a phone number and an email address. Consumers can now easily purchase the product they want...