KUCHING: The growing popularity of “Buy Now, Pay Later” (BNPL) schemes in Malaysia has sparked discussions about their advantages and risks.
While these schemes offer consumers convenient and flexible payment options, they also raise concerns about financial mismanagement, potentially leading to debt accumulation if not used prudently.
The Credit Counselling and Debt Management Agency (AKPK) has expressed concerns over the risks associated with BNPL, warning that the ease of purchasing through these schemes often obscures the long-term financial implications.
The issue gained attention when Finance Minister II, Datuk Seri Amir Hamzah Azizan, revealed in the Dewan Rakyat that BNPL transactions surged by nearly 45 per cent within just six months in 2024.
As a significant portion of BNPL users are younger individuals, AKPK warns that this demographic is particularly vulnerable to unwise financial decisions.
Commenting on the issue, AKPK chief executive officer Azaddin Ngah Tasir highlighted the agency’s research findings, which indicate a notable trend of compulsive spending among consumers.
“Our findings reveal that approximately three in 10 consumers exhibit compulsive spending tendencies, with such behaviours more prevalent among younger demographics.
“This aligns with our research on money and mental health, which found that individuals below 40 experience higher financial distress than those in older age brackets.
“While BNPL offers a financial alternative, its perceived convenience often hides the real cost. Underestimating repayments directly leads to financial risk and distress, turning it from a useful tool into a burden,” he said.
Understanding the Financial Risks of BNPL
The impact of BNPL on consumers can be severe if not managed wisely.
The agency emphasised that its primary concern is increased spending, as the deferred payment structure may encourage consumers to buy beyond their means, leading to debt accumulation.
Another challenge, it noted, is managing multiple financial obligations.
“Although BNPL offers flexibility by consolidating purchases into a single payment or providing interest-free periods, juggling multiple payments across different platforms can be overwhelming.
“This increases the risk of missed payments, which may result in late fees and other penalties.”
For individuals already struggling financially, the agency warned that BNPL could worsen their situation by contributing to over-indebtedness.
“While it may provide temporary relief for managing short-term cash flow issues or emergencies, the misuse of BNPL schemes can lead to deeper financial trouble,” it said.
AKPK’s Guide to Responsible BNPL Usage
To help consumers navigate BNPL responsibly, AKPK advocates the “3P Formula” — Purpose, Payment Capacity, and Payment History.
Consumers are advised to use BNPL for essential and sustainable purchases that provide long-term benefits rather than for impulsive or unnecessary spending.
Additionally, borrowing should be based on actual affordability rather than mere eligibility.
“Before opting for BNPL, consumers should consider factors such as the repayment period and whether their income remains stable throughout the credit term.
“Maintaining a good repayment record is crucial. Meeting financial obligations on time improves access to better financing terms in the future, whereas missed payments can result in additional charges and negatively impact credit scores,” it said.
Managing BNPL Costs and Finding Financial Guidance
Although BNPL services are often marketed as interest-free, they can become costly if payments are missed.
Consumers should be aware of potential financial pitfalls, including late fees, high-interest rates, and the impact on credit scores.
“To help individuals manage their finances, our agency offers various financial advisory services, including debt management solutions and BNPL guidance.
“Our financial advisors provide personalised budgeting support and assist consumers in developing strategies for long-term financial stability. More information is available at www.akpk.org.my.”
Additionally, the agency noted that AKPK offers free financial education resources, including online modules to enhance financial literacy.
It stated that practical guidance on BNPL, including its potential risks, is featured in AKPK’s newly published book, “Realising Potential! Unleashing Your Financial Potential”.
This book, it explained, is part of the GROW series, designed to help young professionals, students, families, and retirees make informed financial decisions.
“AKPK remains committed to equipping individuals with the knowledge and tools to manage their finances responsibly.
“Those facing financial difficulties or concerned about their BNPL usage are encouraged to seek guidance from AKPK’s financial experts,” it said.
