KUALA LUMPUR – Many young adults, especially university students, are turning to the buy now, pay later (BNPL) scheme to support their spending.
With the UCSI Poll Research Centre showing that 73% of Malaysian youth were in debt, Scoop spoke to several of them who generally opined that the scheme is a double-edged sword.
Student Rajveer Singh, 24, said while the BNPL scheme is convenient, he found himself getting carried away and busting his monthly budget on several occasions.
“I think that the BNPL service is great because it is so easy and fast when I don’t have time to reload my e-wallet. I see myself spending more because of this, and I’m shocked when I get the bill at the end of the month.
“But I’m still inclined to use it, convincing myself that I’ll pay the sum at the end of the month.”
Rajveer said he typically spends at least RM300 to RM400 a month via BNPL for travel and food.
“I saw an advertisement about BNPL on social media. I was intrigued and next thing I know, I signed up for an account without looking too much into the terms and conditions.”
As for 22-year-old Eleanor Lee, the BNPL scheme was pleasant to use and provided a simplified shopping experience.
“To be honest, I didn’t know what I was signing up for. I saw the payment options on the e-commerce platforms and thought it was manageable for me to pay for my purchases in three to six months.
“Without realising it, I racked up quite a bill using BNPL services in the past. It crept up on me and I was shocked at how much I owed.”
This led her to change her spending habits to comfortably manage payments without accumulating large debts.
She said she would only spend what she could afford to pay at the end of the month, which typically amounted to RM700.
Another student, Adam Danial, 23, found the BNPL option beneficial for specific circumstances.
“For me, BNPL is a good thing, but I would not use it for high-priced items like RM700 onwards.
“It is useful when you desperately need to get something – for example, a gift or something needed for an event, but do not have the financial capacity.”
Despite finding BNPL useful, Adam set clear limits on his spending.
“Most of the time, I only spend about RM200-RM500 monthly, and that’s the limit I’ve set for myself when using BNPL. You tend to spend a little above the limit without realising how much there is to pay for.”
This self-imposed limit helps him to avoid falling into debt.
The popularity of BNPL services in Malaysia has been on the rise over the past three years.
They offer a convenient and flexible payment option, allowing customers to purchase something in instalments over a period of time.
To set up a BNPL account is easy – applicants only need to take a picture of their MyKad and wait a few days for approval.
Most BNPL platforms offer 0% interest rate on purchases. However, late repayments will result in late fees, depending on the platform’s terms and conditions.
According to a report by iPrice Group, a leading e-commerce aggregator in Southeast Asia, the BNPL market in Malaysia is projected to reach a market size of RM5.8 billion by 2025.
The report also notes that the growth of the BNPL market in Malaysia has been driven by factors such as the increasing popularity of e-commerce, rising consumer demand for flexible payment options and the growing number of BNPL providers in the market. – July 8, 2024