KUALA LUMPUR, July 6 — Bank Negara Malaysia (BNM) is working with the relevant agencies to address concerns that buy-now-pay-later schemes may prompt consumers to spend beyond what they could afford, including via public education.

Despite its exponential growth, with market researchers estimating a transaction volume of over RM2 billion this year alone, the BNPL sector is unregulated. The scheme’s growth was mostly aided by the pandemic as Covid-19 curbs forced shoppers to go online and hunt for discounts.

“Although BNPL schemes typically allow customers to make payments for purchases in installments at zero interest, consumers need to be aware that there may be other charges levied (eg processing fees and late payment fees),” the central bank said in a response to queries by Malay Mail.

“In some cases, the total charges levied by BNPL providers on the customers may be higher than the total interest and charges imposed by traditional lenders for products such as credit cards,” it added.


BNPL schemes offered by non-bank operators currently do not fall within the regulatory purview of BNM or any other regulatory agency.

But the Ministry of Finance and the Securities Commission are currently driving inter-agency efforts to enact the Consumer Credit Act (CCA) in 2022 which will also entail the establishment of the Consumer Credit Oversight Board (or CCOB), the regulator noted.

“The CCOB will eventually serve as the sole conduct authority for all consumer credit activities, starting with those offered by credit providers that are currently unregulated by any authority, such as BNPL schemes offered by non-bank operators,” BNM said.


There are currently close to a dozen BNPL service providers in the Malaysian market, with more expected to join. Market analysts said banks and other traditional credit providers are already working on developing their own BNPL scheme, and could soon join in the fray.

In richer economies, the BNPL sector has drawn the attention of regulators following reports that many of its key players have ratcheted up massive debt.

BNM said with the enactment of the CCA, non-bank BNPL providers are “envisaged to be subject to appropriate regulatory requirements including responsible lending practices to mitigate the risk of BNPL being offered to customers who are unable to repay.”

“Such providers will also be subject to expectations on consumer protection, risk management and Shariah compliance,” it added.

“For BNPL schemes offered by, or in partnership with banking institutions, the banking institutions are expected to observe practices that are consistent with the existing responsible lending requirements.”

For now, the central bank has advised consumers to exercise caution and make informed decisions when using BNPL schemes, paying particular attention to the terms and conditions, especially when it comes to fees and charges.

Users are also encouraged to pay the installments in full and on time to avoid penalties, while at the same time keeping track of BNPL commitments so debts are well-managed.

“They can easily add up if not careful,” the bank warned.