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‘Made too easy’: ‘Buy now, pay later’ schemes ensnare consumers in Malaysia in web of purchases, debt

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PERSPECTIVE OF A BNPL PROVIDER 

The three major providers of BNPL services in Malaysia last year were Shopee, Grab, and Atome. According to the CCOB, these three providers made up 97 per cent of all BNPL transactions. 

Mr Alain Yee, Head of SeaMoney and ShopeePay Malaysia, told CNA that in a similar method to using credit cards, consumers made use of deferred payment or instalment options in order to pace and spread out their payments in accordance with their own budgets or financial planning goals. 

He, however, said that not everyone has equal access to credit cards or other financing services, as the firm found that around 10 per cent of SPayLater users lacked access to conventional credit options. 

“The availability of BNPL services allows this demographic to purchase and afford necessities in times of need, including bill payments, purchasing insurance policies and other essentials,” he said in response to queries by CNA.

Mr Yee added that from their data, fast moving consumer goods – which are items sold quickly at relatively low costs – consistently sat at the top of the most purchased products using their facility. 

“While consumers’ financial behaviour plays a big part in managing their budgets, it is also integral for BNPL providers to take proactive measures in protecting users from overspending. 

“With SPayLater for example, users are provided with individualised credit limits suited to their repayment capabilities, and users are often encouraged to plan out their payments alongside early reminders of upcoming payments,” he said. 

Mr Yee said that when new users activate SPayLater for the first time, they are provided with a lower credit limit that typically ranges from RM100 to RM300. 

And as users continue to utilise the service, several factors will be considered, including their spending and repayment capabilities. 

“Upon internal reviews, users will receive an adjustment to their credit limits, possibly seeing an increase or decrease in their credit limits,” he said, adding that the growth in its user base has been consistent and healthy.

As a result, Mr Yee said that they have seen a decline in the numbers of payment delinquencies as well as overdue payments.

He also welcomed the proposed Credit Consumer Act, saying that it would foster a fair and safe environment for both consumers and consumer credit service providers. 

“Key initiatives that stand out in this regard include the Credit Consumer Act’s requirement for providers to perform affordability assessments on users. This serves a dual purpose for providers to better understand and suit their offerings to individual users, while protecting users from unintentional over budgeting,” he said. 

Atome and Grab did not respond to requests for comments.   

EASY TO APPLY, EASY TO GET TRAPPED 

The Credit Counseling and Debt Management Agency (AKPK) – an agency under the purview of BNM – told CNA that the BNPL providers make it easy for consumers to apply and subsequently be approved to use their services. 

“It is so convenient. You can even pay for food in instalments via your apps. It’s made too easy I think,” said AKPK head for household financial education Nirmala Supramaniam.  

According to Mdm Nirnala, she noticed that a lot of what the youngsters spent on with these BNPL services were for “experiences” such as short holidays, facials, or even for hair coloring. 

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