The real cost of buy now, pay later

THE rapid rise of digital payment methods, especially in developing countries, is reshaping how people conduct transactions and manage their finances. Among these, buy now, pay later (BNPL) services have become increasingly popular and is offered by major merchants. According to the Consumer Credit Oversight Board, BNPL usage in Malaysia surged by 84.3% year-over-year in the first quarter of 2024, with transactions totalling RM2.3bil.

While BNPL offers convenience, it also opens the door to impulsive spending, overspending and potential debt accumulation. Studies suggest that inexperienced consumers, low digital financial literacy and certain mental accounting practices contribute to this issue.