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THE growing popularity of "Buy Now, Pay Later" (BNPL) services in Malaysia has raised concerns about increasing household debt levels.
On the matter, Finance Minister II Datuk Seri Amir Hamzah Azizan said there were 5.1 million active BNPL users, primarily young adults between the ages of 21 and 45, with monthly incomes under RM5,000 as of December 2024 and there are currently 12 companies offering BNPL services in Malaysia.
He explained that BNPL transactions surged to RM7.1 billion for the second half of 2024 which is seen as a significant rise compared to RM4.9 billion in the first half of the same year.
Despite the increase in BNPL usage, the Ministry of Finance (MOF) has taken steps to ensure the financial system remains stable and consumer interests remain protected.
In reply to a question raised by Senator Tuan Musoddak Ahmad in the Dewan Negara today, on efforts in controlling the activities of non-bank credit providers such as "Buy Now Pay Later" services, Amir Hamzah said, MOF introduced the Consumer Credit Bill (RUUKP) for its first reading in Parliament on March 4, 2025.
“This bill is intended to regulate non-bank credit providers, including BNPL service providers, leasing companies, factoring companies, and credit service providers. The bill aims to ensure that credit is offered responsibly and fairly, particularly to vulnerable consumers,” he said.
The minister added, under the proposed legislation, BNPL providers and other credit service providers will be required to follow strict conduct requirements, which include ensuring responsible lending practices and protecting consumers from excessive debt.
“A key component of these regulations is the affordability assessment, which evaluates a borrower's ability to repay debt by considering all financial commitments, spending patterns, and past repayment history,” he said.
Additionally, the new regulations will enforce transparency in BNPL terms, including clear disclosures of fees and charges. BNPL providers will also be obligated to issue frequent reminders to borrowers about upcoming payments to prevent overdue debts.
Amir Hamzah explained, if the bill is passed, it will establish the Consumer Credit Commission (Suruhanjaya Kredit Pengguna or SKP), a new regulatory body under the Ministry of Finance, tasked with overseeing the implementation of these new rules.
The SKP will be responsible for enforcing the regulations and ensuring that credit providers adhere to ethical and fair practices.
Amr Hamzah said, in addition to legislative measures, the government has been proactive in educating the public, especially young people, about the risks associated with credit schemes like BNPL.
“One key initiative is the Financial Education Network (FEN), which has partnered with the Ministry of Youth and Sports and the Ministry of Rural Development to provide basic financial education and digital financial literacy to youth.
FEN also runs a series of programmes designed to enhance financial management skills among young people, including an online financial education initiative, "FEN PROAKTIF." This programme focuses on personal finance management and educating youth on the potential dangers of BNPL services.
“To further spread awareness, FEN organises Financial Literacy Month every October, which includes roadshows aimed at reaching various communities, particularly the youth. The campaign’s goal is to improve financial literacy and provide practical advice on managing personal finances.
Managing Household Debt Levels
Amir Hamzah cited, as of December 2024, BNPL loans amounted to RM2.8 billion, which accounts for only 0.2% of total household debt in Malaysia.
He said: “The level of overdue BNPL payments remains manageable, with RM82.6 million in overdue debt, representing just 2.9% of the total BNPL credit.”
Despite these relatively low figures, the government remains committed to ensuring that BNPL usage does not lead to excessive consumer debt, which could harm the financial well-being of Malaysians.
The proposed Consumer Credit Bill and ongoing financial literacy efforts are key steps in balancing consumer access to credit with responsible borrowing practices, he explained. – March 11, 2025
