The growing popularity of BNPL is a reflection of the culture of instant gratification that is prevalent among the younger segments of society.
KUALA LUMPUR: There must be some urgency to regulate the buy now, pay later (BNPL) payment method that is increasingly being offered for smaller retail purchases, according to participants at a forum.
Organised by Khazanah Research Institute (KRI), the forum noted that the growing popularity of BNPL is a reflection of the culture of instant gratification that is prevalent among the younger segments of society.
While only consisting about 0.1% of total household debt in Malaysia at the moment, BNPL is anticipated to see a quicker growth pace from a small base, moving forward.
This growth could also take some market share away from other payment forms such as credit cards or eWallets.
The KRI Forum is titled “Redefining Credit: The Rise of BNPL in the Consumer Credit System”.
“We also analyse the rise of BNPL amid the backdrop of household wage stagnation. I’m from Generation X, and we saved up before buying items (excluding big-ticket).
“But now it’s moving to BNPL, which is basically an attribute of consumerism and instant gratification that permeates into our present culture. My view is that this needs to be regulated,” said KRI director of research Suraya Ismail.
KRI senior research associate Shereen Hazirah Hishamudin said BNPL caters to this desire by offering a frictionless shopping experience, allowing consumers to acquire products instantly without upfront payment.
“The acquisition of goods is closely tied to personal identity and social status nowadays. In societies where material possessions are viewed as symbols of success, BNPL can facilitate the pursuit of a lifestyle that might otherwise be out of reach,” Shereen Hazirah said.
“Regulations should be introduced. We really welcome Consumer Credit Oversight Board Task Force’s (CCOB-TF) role in this with regard to the Consumer Credit Act (CCA).
“While there’s a lot being said that BNPL is still nascent and under control, there needs to be a proactive approach in how we want to regulate the industry as it can escalate very quickly,” she added.
Shereen Hazirah also noted the consumer should be educated on BNPL and individuals should be given a clearer picture of the debt they’re accumulating.
“If their debt service ratios are very high, more debt is unnecessary,” she said.
CCOB-TF deputy head Datin Azryta Abdul Aziz said it is necessary for the CCA to be enacted as the body continues to monitor the state of the BNPL sector.
