Buy Now Pay Later raises Concern over Malaysians Spending Habits
KUALA LUMPUR: More than 80% of the Buy Now Pay Later (BNPL) users are young working Malaysians earning less than RM3,000 per month, says Consumer Credit Oversight Boards (CCOB).
CCOB stated that 3.7 million of active users of BNPL are mostly 21 to 45-year-old. The credit exposure, or total active outstanding credit, was RM1.42 billion at the end of the first quarter of 2024, up 34% from the end of 2023, according to the CCOB.
When the youngster did not realise that “zero interest” often comes with higher charges and penalties when they missed their monthly payment, they will be trapped in the monthly instalments of three, six, 12 months or even 24 months.
With some hidden processing fees, the charges of late payment usually exceed the original amount.
In its first half of 2024 Financial Stability Review, Bank Negara Malaysia noted that risks from BNPL schemes continue to be limited with outstanding exposures remaining small at just over 0.1% of overall household debt.
However, this record only portrays those BNPL that are under bank-regulated. While those non-bank regulated BNPL services remain outside Bank Negara’s oversight, highlighting worries about aggressive debt collecting methods, unregulated fees for late payments, and consequences.
about aggressive debt collecting methods, unregulated fees for late payments, and consequences. Although debt collectors have not been known to paint houses red or beat up BNPL debtors like loan sharks, this is not impossible in the long run.
While awaiting the implementation of the CCA, Bank Negara has been urged to increase awareness of the dangers associated with BNPL.
