All companies offering buy now, pay later services will be required to carry out creditworthiness and affordability assessments before approving financing once the Consumer Credit Act 2025 comes into force later this year. Deputy Finance Minister Liew Chin Tong said the move is aimed at strengthening consumer protection as BNPL usage continues to grow.

The new requirements are already legislated and will apply once the Act is implemented.

New Rules Target Responsible Credit Practices

Under the Consumer Credit Act 2025, BNPL providers must practise responsible credit provision. This includes ensuring that transaction terms, fees, and charges are transparent, reasonable, and do not place an excessive financial burden on users.

For consumers, this means clearer information at the point of purchase and tighter checks before credit is approved, reducing the risk of taking on repayments that may be difficult to manage.

Consumer Credit Commission Expected By Mid-Year

The Act also establishes the Consumer Credit Commission, which will regulate non-bank credit providers and credit service firms, including BNPL operators. Liew said the government hopes the commission will be operational by mid-2026.

Once active, the commission will oversee compliance, investigate breaches, enforce regulations, and impose penalties on providers that fail to meet consumer protection standards.

Law Already Passed And Granted Royal Assent

The Consumer Credit Act 2025 was approved by both the Dewan Rakyat and Dewan Negara last year and received royal assent earlier this year. The legislation was introduced in response to concerns over the rapid expansion of BNPL schemes and their potential impact on household finances.

With the legal framework now in place, implementation will focus on supervision and enforcement rather than further legislative changes.

BNPL Usage Growing But Remains Contained

Liew said BNPL activity in Malaysia remains at a manageable level. As of end-December 2025, outstanding BNPL loans stood at RM4.9 billion, accounting for about 0.3% of total household debt.

Overdue BNPL loans totalled RM160.2 million, or 3.3% of outstanding balances. These figures suggest that while usage is expanding, overall exposure remains relatively limited within the broader credit system.

Transaction Volumes Surge In 2025

BNPL transactions rose sharply in 2025, increasing 66% to 243 million transactions. Transaction value climbed 78% to RM21.3 billion.

Young consumers under the age of 30 accounted for around 40% of BNPL usage. Most transactions were for daily necessities such as groceries, food, transportation, and services, with an average transaction value of RM91.

Household Debt And Youth Borrowing In Focus

Malaysia’s total household debt reached RM1.69 trillion by the end of September 2025, equivalent to 84.9% of gross domestic product. Borrowers under 30 years old accounted for 7.8% of this total, or RM132.4 billion.

Among younger borrowers, unsecured debt such as personal financing and credit card balances stood at RM10.6 billion. The median age of young borrowers with unsecured debt was 27.

How Affordability Checks Link To Debt Commitments

Affordability assessments under the Consumer Credit Act 2025 are expected to take into account a user’s existing financial commitments, not just the value of a single BNPL transaction.

One common measure used in lending decisions is the Debt Service Ratio, or DSR, which shows how much of a person’s monthly income is already committed to debt repayments. A higher DSR can limit access to additional financing, even when income levels appear sufficient.

For BNPL users, multiple small instalment plans can add up and affect overall affordability. Checking personal DSR before taking on new instalment payments can help users understand whether repayments remain manageable, rather than relying solely on approval at checkout.

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