Buy now, worry later: The hidden cost of BNPL

BNPL providers should adopt ‘affordability-by-design’ rather than ‘affordability-after-default.’

In parliamentary replies carried by local media in early 2026, Malaysia’s buy now, pay later (BNPL) balances were reported at RM4.9b ($1.5b) as of 31 December 2025, roughly 0.3% of total household debt, with 7.5 million users and an overdue ratio of around 3.3%. Those same reports also revealed another detail that BNPL usage is heavily concentrated amongst youth and lower-income users, and the average ticket size is modest, with BNPL commonly used for essentials such as food, groceries, transport, and services.

Those numbers are frequently used to reassure the public that BNPL remains “contained” and that framing is not entirely wrong from a macro-balance-sheet perspective. The more important question for Malaysia’s financial well-being, however, is not whether BNPL is large enough to threaten the banking system, but whether BNPL is becoming a default coping mechanism for cashflow stress, because that is where long-term consumer harm accumulates quietly, even when the national percentage looks small.

The metric that hides the real problem
BNPL is often debated as if it were simply a smaller, newer version of credit card debt, and that comparison misses the crucial difference in how the product is experienced. Credit cards are typically applied for deliberately, then used repeatedly. BNPL is embedded at the checkout, presented at the exact moment when attention is on the product price, not on the cost of credit, and the cognitive framing shifts from “borrowing” to “splitting,” which makes the decision feel smaller than it really is.

This is why BNPL can remain “small” in terms of outstanding balances whilst still shaping household behaviour in a meaningful way. A system can generate hundreds of millions of micro-instalment transactions a year, channelled into everyday consumption, without producing a dramatic balance sheet number that would trigger an alarm. The consumer risk is therefore less about the stock of debt and more about fragility, because fragility emerges when many small obligations accumulate across merchants and providers, whilst the borrower is still experiencing the repayment burden as a series of separate, manageable commitments.

When BNPL is used mainly for discretionary purchases, the product behaves like a convenience. When it is used for essentials, the product begins to behave like salary smoothing, especially for workers whose expenses do not match the timing of their income, and especially when household buffers are thin. In that world, BNPL is no longer simply a payment option, because it becomes an informal credit layer compensating for income volatility and rising living costs, and the market starts normalising short-term borrowing for routine needs.

Why “stacking” is where harm concentrates
The most under-discussed risk in BNPL is “stacking,” where a consumer holds multiple BNPL accounts across providers and merchants, each of which appears small when assessed in isolation, but becomes heavy in aggregate once repayment dates cluster. This is a design and data coordination issue more than a morality issue, because BNPL’s business model is optimised for ease of approval and low friction, whilst many household budgets are optimised for pay cycles, not weekly instalment schedules.

This is also why overdue ratios can remain modest at the portfolio level whilst a meaningful minority experiences repayment stress, because the problem concentrates amongst a segment that is less visible to any single provider’s risk model. Put differently, the early warning signal for BNPL harm is not an economy-wide debt percentage, but rising “instalment congestion” amongst the same households, where recurring obligations collide with rent, utilities, and transport costs in the same weeks each month.

Malaysia is already moving BNPL providers toward stronger governance expectations under the Consumer Credit Act 2025, including licensing timelines and responsible lending duties, which provide an important foundation. The market test, however, is whether BNPL firms and merchants treat responsible lending as a compliance item or as a product design discipline that reduces fragility whilst preserving legitimate use cases.

I believe these are the three market commitments that would quickly change outcomes.

First, BNPL providers should adopt an affordability-by-design approach rather than an affordability-after-default approach. This means treating limits and approvals as dynamic tools that respond early to stress signals, rather than as growth levers that expand with usage volume. Providers should build clearer internal thresholds for when repeat late payments trigger a cooling-off period, when limit increases are paused, and when repayment schedules are restructured to reduce clustering.

If BNPL is increasingly used for essentials, then product design should prioritise repayment resilience, not only conversion rates, because “manageable on average” is not the same as “manageable for the user segment that drives usage.”

Second, marketplaces and large merchants should treat BNPL placement as a consumer-trust decision, not a revenue optimisation hack. The checkout design should highlight repayment as a real possibility without shaming the consumer. This means prominently showing the total repayment amount, the number of instalments, and the relevant dates, whilst avoiding urgency cues that push users into credit reflexively.

It also means ensuring BNPL is not pre-selected by default and that the language used does not imply “free money,” as fees and penalties can apply under certain conditions.

A marketplace that becomes known for painless sign-ups and painful repayment experiences will eventually pay the price in disputes, churn, and consumer distrust, even if the short-term numbers look good.

Third, the payments layer should establish a shared visibility standard that makes it harder to hide stacking. Banks, e-wallets, payment gateways, and credit bureaus should treat BNPL visibility as a consumer well-being feature, similar to card spend tracking. The most practical step is an industry-standard BNPL dashboard that shows a user their upcoming instalments across merchants in one place, paired with a consent-based mechanism for providers to detect high-level stacking risk indicators without exposing sensitive purchase details.

This is not about punishing users. It is about restoring the ability to see and manage obligations in aggregate, because fragmented obligations are exactly how “small” credit becomes quietly dangerous.

BNPL can be a useful bridge when it is designed for resilience and transparency and functions as a controlled budgeting tool rather than a frictionless substitute for income adequacy. Malaysia’s BNPL debate should therefore move beyond the comfort of national percentages and focus on the behavioural reality: A product that sits inside checkout flows will shape spending decisions, and a product used for essentials will reflect household stress even when macro indicators look calm.

If the market treats BNPL as engineered wage smoothing, then the responsibility is to engineer it for stability, or accept that the real cost will show up later as distrust, disputes, and financial fatigue amongst the very consumers the digital economy depends on.