KUALA LUMPUR (March 24): Buy-now-pay-later (BNPL) transactions in Malaysia continued to expand in the second half of 2024 but their total outstanding debt remained modest at RM2.8 billion or 0.2% of total household debt, according to Bank Negara Malaysia (BNM).

The central bank noted that BNPL transaction volumes and values rose significantly in the second half of 2024 to 83.8 million transactions worth RM7.1 billion, up from 62.2 million transactions totalling RM4.9 billion in the first half of the year.

Active users jumped to 5.1 million as of end-December, from 4.3 million at end-June.

Despite the growing usage of BNPL schemes, BNM assessed that risks from it remained contained, with the overdue amount remaining low at 2.9% of total BNPL outstanding balance during the second half of 2024, up from 2.6% in the first half.

"BNPL providers also continue to observe practices that serve to mitigate concerns over broader risks from distressed borrowers," BNM said in its Financial Stability Review — Second Half 2024, released on Monday.

"These include observing lower credit limits for new users, immediately suspending facilities upon a missed repayment and proactively managing credit limits of users with anticipated repayment difficulties," it added.

Looking ahead, regulatory oversight of the BNPL sector is expected to strengthen with the enactment of the Consumer Credit Act (CCA) in 2025. The act will establish the Consumer Credit Commission to regulate and supervise non-bank credit providers, including BNPL firms that currently operate outside formal regulatory frameworks.

"This will strengthen existing regulatory and supervisory arrangements for the protection of credit consumers," BNM added.