This article first appeared in The Edge Malaysia Weekly on December 8, 2025 - December 14, 2025

A fresh graduate’s starting salary of RM3,500 roughly translates into take home pay of RM3,000 after statutory deductions. So, imagine this: With his eyes set on a pair of branded sneakers that cost RM300, he clicks on the “buy now” button and selects the option that allows him to pay for the purchase in three interest-free instalments. He is unfazed by the fact that his first pay cheque is not in his bank account yet, as the first instalment is only due a month from the purchase date.

Spending is now made easier thanks to the buy now, pay later (BNPL) scheme which has opened up an avenue to credit for those who previously did not have access to such facilities.

“If you think about it, it’s not very different from a credit card — except that you get to stretch your payments over a longer period of time, interest free, making the repayments more manageable,” says an executive who uses BNPL financing. He also uses credit cards, depending on the option that gives him the best discounts.

A conservative consumer may frown on such credit schemes as it encourages the accumulation of debt, but it looks like BNPL financing is here to stay. In markets where such financing is more mature, like in the US where it is a US$100 billion industry (and growing), more than 90 million users are tapping into these schemes for interest-free instalments.

Here in Malaysia, BNPL players are still very much in the nascent stage despite the traction gained during the Covid-19 pandemic. The scheme’s rising popularity among consumers, however, even have several conventional and digital banks jumping on the bandwagon to make it part of their product offerings.

Statistics by the Consumer Credit Oversight Board (CCOB) Task Force, which is spearheaded by the Ministry of Finance, Bank Negara Malaysia and the Securities Commission Malaysia (SC), showed that BNPL transactions grew from 30.6 million valued at RM2.7 billion in the first half of 2023 (1H2023) to 102.6 million worth RM9.3 billion in 1H2025.

In response to questions from The Edge, CCOB says a total of 65.2 million BNPL transactions worth RM5.5 billion were recorded in 3Q2025, representing 14% growth in value from the RM4.8 billion (53.7 million transactions) in 2Q2025.

The growth has been exponential, with 16 players in Malaysia offering the BNPL scheme. Three of them dominate the market: SPayLater by ShopeePay, Atome and PayLater by Grab.

CCOB also reveals that the total BNPL outstanding balance amounted to RM4.2 billion at end-September. While it may look like a drop in the ocean compared to the total household debt of RM1.6 trillion, its exploding growth was enough to draw the regulator’s attention. “While total outstanding BNPL debt represents only 0.3% of the total household debt, its rapid growth warrants close monitoring,” says CCOB.

The currently unregulated BNPL industry, along with other consumer credit providers such as money lenders and pawnbrokers, will soon fall under the purview of the Consumer Credit Commission, which has been entrusted to oversee matters related to consumer credit under the Consumer Credit Act 2025 (CCA) that was passed in the Dewan Rakyat in September. The Act is expected to be gazetted by the end of this year.

BNPL players are only scratching the surface of the market’s potential in Malaysia. The growth is expected to persist in the near term as growing consumer adoption, broader merchant acceptance and integration of the BNPL solution in the e-commerce and retail ecosystem expands, says CCOB.

“As one of the earliest entrants in the region, we’ve watched fintech adoption continue to grow and mature. For BNPL specifically, we believe the sector still has more to provide Malaysians, and likewise there is still a strong interest in adoption,” says ShopeePay Malaysia CEO Alain Yee.

“From what we observe, the appeal of BNPL goes beyond convenience. Many turn to BNPL because it serves very practical financial needs. Hearing from our users, BNPL allows them to access emergency funds without traditional credit, keep cash on hand for investments and manage spending more predictably.”

ShopeePay’s SPayLater has more than 50% market share of active BNPL account holders in Malaysia. There were seven million active account holders across Malaysia as at end-September.

CCOB’s statistics show that overdue BNPL debt had declined from 5.3% in 1H2023 to 3.2% in 1H2025. As at end-September, overdue BNPL debt constituted 3.5% of the total outstanding balance of RM4.2 billion.

“This shows that as a whole, the BNPL industry is growing in a disciplined and sustainable way, with inherent measures by major BNPL providers such as freezing a BNPL account upon a missed payment, rigorous underwriting standards and rejecting applications/transactions by customers with an overdue history working as intended,” says Atome Malaysia’s head of BNPL Danny Lim.

BNPL service providers emphasise that unlike credit card providers, they do not charge late payment interest on overdue amounts. Instead, they freeze the user’s account, preventing the account holder from further using the facility.

To reactivate the BNPL account, users are charged a flat fee of RM10 to RM23, depending on the provider. The BNPL service providers say the fee is mainly to encourage responsible repayment and cover the cost of collection, and not to make a profit.

While credit cards usually provide a fixed credit limit upon application, the BNPL limits are seen as more dynamic — adjusted frequently based on updated assessments of creditworthiness and affordability. The scheme is restricted to the purchase of goods and services, whereas credit cards also offer a cash advance facility within the allocated credit limit.

CCOB notes that over time, some BNPL offerings have evolved to resemble credit card features. It says it is monitoring these developments closely to ensure that regulatory requirements remain appropriate and effective in protecting the interests of credit consumers.

As BNPL financing began with online purchases, it is no surprise that users mainly comprise the younger generation. CCOB’s data shows that 40% of BNPL transaction value and volume were contributed by those aged 30 and below.

Additionally, the data shows that the majority of active BNPL account holders are between 21 and 45 years old, many of whom are from the low-income group and do not have access to other sources of personal financing.

While one could assume that users would utilise BNPL for big-ticket items, that has not been the case. The data reveals that the average value per BNPL transaction is less than RM100, particularly for everyday expenses such as food and dining in restaurants, retail shopping, transport and services.

This is expected, with ShopeePay’s SPayLater having 56% share of the BNPL market and PayLater by Grab having 8%. The platforms primarily serve the users of their in-app ecosystem, namely Shopee and Grab, which started out as an e-hailing app.

Yee says the age of SPayLater users ranges from 23 to 65 years old, while its main user base are those in the middle- to low-income groups. The top categories for SPayLater purchases include fast-moving consumer goods (FMCG) such as home supplies, baby supplies and groceries; home appliances and furniture; and electronic items.

As for Atome, which has 26.5% share of the BNPL market, about 80% of its registered BNPL users are between the age of 25 and 45, with more than 55% of them being female, says Lim. The average transaction value ranges from RM100 to RM300, with the top categories of purchases being retail, health and beauty, and lifestyle (travel, insurance and auto services).

Atome mainly relies on its tie-up with merchants, be it online retailers or conventional bricks-and-mortar outlets. It says it has partnership with more than 17,000 merchants.

Both Atome’s Lim and ShopeePay’s Yee say BNPL financing is a good option for those who lack access to traditional financing, typically the younger generation and those in the B40 group. They say this prevents them from turning to illegitimate credit lines such as those offered by unlicensed money lenders.

“Notably, we have seen healthy performance [of BNPL financing] in non-urban regions where access to legitimate financial services may be lacking. Here, we’ve seen underserved users shift in behaviour as they begin to turn away from illegitimate lending during times of need once they’ve utilised SPayLater,” says Yee.

When BNPL was introduced to the Malaysian consumer, the offer was usually an interest-free instalment plan of three to four months. As time passed, service providers started to offer instalments of up to 24 months.

Notably, instalments that go beyond three to four months attract an interest rate of 1.5% per month. This means the total interest could come up to 18% for a 12-month instalment plan.

Yee says more than two-thirds of SPayLater users opt for the one- to three-month payment plans, while the remainder choose a longer period. He adds that the vast majority of users pay their instalments on time and its default rate remains lower than that of traditional credit cards.

Lim says most of Atome’s BNPL account holders use the three-month, zero-interest option. He adds that the extended instalment periods of six, nine and 12 months are only made available to selected merchants and eligible users who meet its underwriting criteria. “Our instalment rate covers the cost of funds, risk and operations over a longer tenure,” he adds.

The prevalence of the BNPL scheme today, coupled with accessibility to online shopping platforms, means that consumers, especially the younger generation, do not see the need to have a credit card. An executive in her late twenties says she has never had a credit card despite being eligible for one.

“I shop online a lot and with BNPL financing available for almost anything I want or need, I don’t see why I should get a credit card. As long as I split the amount up under the interest-free period, usually three or four months, it helps me manage my cash flow. I’ve used it for purchases as low as under RM20 to as high as RM1,000,” she says.

Nevertheless, she admits that using BNPL requires a lot of discipline on her part, given the ease to split payments up, in addition to the scheme being “quite addictive”. She adds that there have been occasions when she found herself in a tough spot after overspending.

“Well, the instalment amounts do add up if I’m not careful. Because I get to split my payments over three or four months, it feels like I’m spending less when in actual fact, I’m not,” she explains. Her overspending meant having to cut down on other expenses for the subsequent months, usually on entertainment or eating out, until her finances were back in check.

This executive is not alone as other BNPL users whom The Edge spoke to are facing the same issue of overspending because of the interest-free feature.

While economists whom The Edge spoke to welcome the additional source of financing for consumers, they cautioned that the BNPL scheme could encourage young consumers, especially those who may be financially challenged, to spend beyond their means because it is the only way they can afford to make a purchase. They say financial discipline is key, otherwise BNPL can become a debt trap for consumers.

It is worth pointing out that BNPL financing is available to those aged 18 years and above. This also raises the question of whether it is wise to encourage a culture of easy debt among those who are secondary school leavers.

CCOB sees this as the responsibility of both the BNPL service providers as well as consumers. It says credit providers will be required to conduct a creditworthiness and affordability assessment before granting credit and also implement account suspension measures for those who default on payments.

“These steps aim to prevent consumers from accumulating additional debt and help them manage existing obligations more effectively. Such measures form part of a broader effort to ensure responsible lending and safeguard financial well-being,” it adds.

But regulation alone is not sufficient, says CCOB, adding that consumers who take on credit must also understand their financial limits and practise responsible borrowing.

CCOB is collaborating closely with the Credit Counselling and Debt Management Agency (AKPK) and Financial Education Network (FEN) to promote financial literacy, raise awareness of debt risks and encourage smart money management among Malaysians.

Notably, BNPL providers do not deny the tendency among consumers to overcommit when it comes to instalments and emphasise that financial responsibility is necessary.

“Similar to any form of credit, concerns about overconsumption are valid, but ultimately personal financial responsibility plays a key role. In that sense, BNPL is no different from credit cards. Users need to be aware of their financial situation and spend within their means,” says Yee.

On top of that, they reiterate that BNPL financing is done in a transparent manner and reminders are often sent to users well before the due date so that they can stay on top of their payments.

“That is why we focus on transparency, clear terms and disciplined use of data to support responsible usage. We believe that when short-term credit is offered in a structured, well-regulated and data-informed way, it can give Malaysians, including those traditionally overlooked by the financial system, a safer alternative to informal lending and a practical way to manage day-to-day cash flow without compromising their financial health,” a Grab Malaysia spokesman tells The Edge in a written statement.

Atome’s Lim says BNPL users can pay back the full amount without having to wait for the due dates. He adds that the probability of “snowballing” instalments is very low, given that the average transaction value is below RM100 and the practice to suspend an account upon a missed payment.

The soon-to-be gazetted CCA will put BNPL service providers under a unified regulatory framework where the Consumer Credit Commission will function as the regulator responsible for licensing and supervising them.

“This brings BNPL players under formal oversight for the first time, requiring them to meet the fit and proper requirements, and importantly, in compliance with various conduct standards designed to ensure fair, responsible and transparent credit business,” says CCOB.

It explains that a key pillar of the CCA is responsible lending, which means BNPL service providers will have to conduct affordability assessments before approving credit. This is to prevent over-indebtedness and protect vulnerable consumers, particularly the youth and those with lower income.

“Providers must also adhere to higher transparency and disclosure standards, ensuring that all terms, including fees and charges are clearly communicated. The Conduct Standards under the CCA outline 11 consumer protection principles, including fair contract terms, reasonable charges and ethical debt collection practices,” it says, as well as prohibiting predatory practices and setting rules for advertising, dispute resolution and data protection.

The aim is to have the BNPL services evolve in a safe and transparent ecosystem, promote financial literacy and empower financial consumers, says CCOB.

BNPL service providers are currently not required to share their consumer lending data. This could result in a situation of debt stacking for users as they move from one provider to the next. However, this will change soon because the authorisation standards under the CCA will require BNPL service providers to submit consumer lending data to licensed credit reporting agencies of their choice, excluding CCRIS for the time being.

“The move aims to enhance transparency and support credit profiling, which can be beneficial for future loans. However, it also means that a poor repayment record with BNPL could affect a consumer’s ability to access BNPL or other credit facilities in the future,” says CCOB.

It adds that this underscores the importance of credit consumers taking responsibility for their spending and repayment obligations.

“With greater transparency on BNPL usage, consumers must be acutely aware of their spending habits and ability to repay. Access to credit, even via BNPL, comes with the responsibility to manage it prudently to avoid negative impact on one’s credit standing,” says CCOB.

In a nutshell, the CCA will benefit service providers with better consumer credit data visibility and also help protect consumers from being overextended with debt. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.