- 4 hours ago
Penggunaan Buy Now Pay Later (BNPL) terus meningkat di Malaysia dengan baki tertunggak mencecah RM5.3 bilion dan lapan juta pengguna aktif. Adakah BNPL memperluas akses kewangan atau menjadi petunjuk tekanan kos sara hidup, khususnya dalam kalangan B40 dan belia?
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00:07Hello, I'm Tamina Khosgi and this is Niagara Spotlight.
00:10Today on Future Affairs, our spotlight is on buy now pay later services.
00:14With 8 million active count holders and counting across the country,
00:17Malaysia's BNPL market is expanding rapidly.
00:21Now, outstanding BNPL balances reach 5.3 billion ringgit as of March this year,
00:26up from 4.9 billion ringgit just three months earlier.
00:29While that still represents just under 0.2% of total household debt,
00:34the trend is drawing some closer attention from policymakers,
00:37as more consumers have been using BNPL for survival financing
00:41and purchasing everyday essentials including food, groceries and transport.
00:47At the same time, the industry is entering a new regulatory era.
00:51BNPL providers have until the 30th of November to obtain licenses
00:56under Malaysia's new Consumer Credit Commission framework.
01:00So, is BNPL strengthening financial inclusion and consumer choice
01:05or does its rapid growth point to deeper pressures on household finances,
01:09especially for B40 low-income families and also youth under 30?
01:14We examine what these shifts may be meaning for, of course, consumers,
01:18businesses and the near future of Malaysia's digital credit landscape.
01:22Welcoming to the studios now, of course, Nirmala M. Supramaniam,
01:26who is the Head of the Household Financial Education Department
01:28with Agency Counselling and Pengurusan Credit or AKPK Malaysia,
01:32together with Anil Singh Gil, President of the Fintech Association of Malaysia FAOM.
01:38Very good morning to the both of you.
01:39Good morning.
01:40Good morning.
01:40Thank you so much for making time.
01:42Nirmala, if we could get started off by me asking you about
01:45the outstanding BNPL balances that made some headlines recently.
01:50Now, looking at the fact that many of the transactions are actually being used
01:55for purchases which are under a hundred ringgit, despite, of course,
01:59they're not being too much concerned because overall household debt is still though.
02:03But though, from your point of view, at what point does this BNPL usage for routine expenses
02:09actually move from being something which is a practical budgeting tool to an area of more concern?
02:17I think, rightfully point, that it is not concerning now.
02:22It's not alarming now as it's still very low.
02:25But what is more alarming and what is what is more that we should actually worry for is the
02:29habit that we are carrying through this.
02:31Like previously when, I mean, if you were to take a loan, one of the reasons that we see is,
02:38is it a productive loan?
02:40Are we going to gain something from it?
02:42Are we take, for example, let's say I use this BNPL to, I'm doing home cookies,
02:49home baked cookies, home business, home based business.
02:51And I'm using this to buy a bigger oven or a bigger equipment so that I can increase my revenue.
02:56So that becomes a productive purpose.
02:59So I would be able to generate more income through this loan.
03:03So it becomes something that I'm investing to improve my income in future.
03:07But when it becomes more of a household usage, like basically just to cover what I cannot afford
03:14for my basic necessities, for my living expenses.
03:18Month to month.
03:19Month to month.
03:20Yes.
03:20So that becomes a worrying factor, meaning that whatever that I'm earning is actually not enough
03:26to cover my expenses here.
03:28And I'm just rolling my income as when I get the pay, I'm paying back all these installments.
03:35And then by mid month, I have to start using loan again to sustain my livelihood.
03:42So that becomes a worrying factor because what if there is a disruption to your income?
03:47What if you can't pay up these installments that you've acquired?
03:51So when we talk about it becoming a strain, it's more because of the habits of what we are using.
03:57And worse off is if it's used for lifestyle expenses, more of like immediate indulgence.
04:06Like even I've known students who have actually used it for a spa to purchase a package of spa,
04:12to even have, even when I was, I actually personally witnessed this,
04:19they were actually using buy it now, pay later on installment to have a meal in the restaurant.
04:25Right.
04:25Yeah. So this is a lifestyle indulgence. So when your habit comes to you are using loans for this
04:33to cater your lifestyle indulgence, that is something that we all really need to worry about.
04:38Absolutely. And that also taken as part of the bigger picture, that average household expenses
04:43have certainly been increasing, creeping up slowly year on year due to general cost of living related issues.
04:51So repeated borrowing is one thing, but at the same time also it can point to a general shortage of
04:58cash
04:59even before somebody misses payments. Thank you for that, Nirmala.
05:03Anil, now Malaysia's new Consumer Credit Commission, the licensing framework is designed to
05:09really strengthen that oversight for BNPL providers, right? So beyond compliance,
05:15what are some thoughts on responsible lending and how that needs to be looking like so that we are
05:21able to cater beneficially for this huge and increasing number of Malaysians?
05:28Yes, I think the Malaysian government was very quick, very responsive to BNPL, you know,
05:34realizing that this is something where they need to react quickly and legislate quickly. And the formation of
05:40CCOB and now SKP has moved very quickly actually along legislative lines. They're a very innovative
05:46agency in the sense that they're proportionate. They actually have a very good dialogue with the
05:52industry. They don't want to stifle innovation. They realize that innovation for innovation's sake
05:56is one thing, but they also realize by putting too much regulation on top of that, then there would
06:02be a backdoor as well that could be exploited. So they want to work with the... So there are a
06:07couple of
06:07safeguards that they've built in. I mean, we know about the licensing framework, but even before that,
06:12the legislation is quite clear about disclosures, making the disclosures very transparent.
06:18That means, and in simple layman terms, nothing complicated. And then the other thing that they
06:23are very keen on doing is self-regulation by the BNPL players. Technology is an enabler. It allows you
06:30to do frictionless payments, but you can also do frictionless education or friction right, as they call it,
06:36at the technology layer. So before a customer borrows through BNPL, there could be a cash flow
06:43analysis. They could do some sort of self-check, some sort of income affordability assessment at
06:49that point. It could be tiered. So if it's above a certain amount, then it's a little bit more of
06:54a
06:54check to say an opt-in. Do you really know that this is a 1500 ringgit purchase, not like a
06:59100 ringgit
07:00purchase? And do you know how this would affect your debt service ratio? So all these safeguards are
07:05being built into the technology already. There's also talks about some of the publishing of
07:11effective interest rates. So the regulator wants to build an ecosystem where there's trust and
07:17confidence for the consumer, protects the consumer from predatory lending practices, but still allows
07:23technology to thrive and allows the players to have a level playing field in the market.
07:28Exactly. And there's roughly around a dozen established players at the moment.
07:34Does there appear to be movement for even more players to be joining?
07:38Yes, there are. Applications for new licenses and new entrants to the market are quite voluminous,
07:44apparently. Wonderful. So things are progressing well in that aspect.
07:48Nirmala, now while the overdue BNPL balances, once again, they're a relatively small share of total
07:55outstanding loans, but financial stress is not necessarily reflected in whether a person,
08:02an individual can make payments or not. What sort of early warning signs should consumers also take
08:08upon ourselves to look out for? Let's look at the consumers first.
08:13I think one of the earliest signs is not having enough to sustain your livelihood. That means basic
08:20necessities, like what we mentioned earlier. I mean, people are using loans for covering for
08:25household usage, household basic food, right? So that's early signs already to say that, hey,
08:32my cash flow is tight. There's something wrong with my income. I really do have to work on this.
08:37So a common thing that we see in AKPK when people come to us with debt problems are taking one
08:45loan to
08:46cover another. So in this case, probably we do. Loan stacking. Yeah, no stacking. So I've taken,
08:53this started years ago, I've taken three, four credit cards and if I can't repay them, I go for the
08:58next
08:58loan to help me repay this. And then I'm exposed again to new loans. And because the core thing is
09:05the
09:06expenses, your household expenses, you don't have sufficient income to cover that when that is
09:12not enough. And that's like a sign. So you will continuously be taking loans and it will come to
09:17a stage where we really cannot afford to pay because it's just too much, too many. So early signs are
09:23first thing you don't have enough to cover your basic household expenses. This is one of the things
09:28that we have to look for. Though we are able to pay now, but if we continue this trend, then
09:34we have
09:34to also see how long it's going to take. Yeah. And of course, there are many people who are,
09:41yeah, we take up many loans to cover one. And there is, we also tend to, okay, I use this
09:49new loan to cover
09:50this loan thinking that I will have future income coming in. And there's no future income. There's
09:55no additional income that's going to come in faster or I think so. And also the stress of actually,
10:02hey, if any landline numbers call you, you really don't want to pick up. Yeah. Because you do feel
10:11like, hey, somebody is going to call me to pay up. So you have this constant stress with you as
10:16well.
10:17So these are a few of the early signs. Basically, you really need to know your cash flow. If your
10:22household
10:23is already tight, then there is really something that I have to look for. And of course, when we look
10:27to our
10:28commitments. So we always go with the debt to income ratio of 40%, so saying that whatever your
10:35loan repayment should not exit 40% of your income. So if you do that calculation, let me see like
10:42monthly how much I'm paying for my loans. And if I do see that the amount is actually higher than
10:4840%
10:49of my income, then there's also a sign. Yeah, there's also a sign because when for those who are wage
10:56earners,
10:57monthly wage earners, they do not see the problem, unless when their income is disrupted,
11:02there's a disruption or even not to the income, maybe there are other emergencies, there's medical
11:07emergencies, there's such emergencies. And when it comes to an emergency, I can't even raise a
11:13thousand ringgit. So this was one of the risks. I mean, past research showed that close to about 70%
11:20of Malaysians can't raise a thousand ringgit when it comes to emergency. Which is a very narrow window.
11:26Yeah, very narrow. So these were also issues that we see that when it comes to an emergency,
11:33I do not have the cash. And I think COVID was a great lesson to a lot of us to
11:38show that
11:40even you're a wage earner, there could be disruptions and medical expenses, accidents,
11:45issues to the sole breadwinner. Even if I were to take in a simple repair in your home,
11:51you know, you don't have to think so big and there's even like a simple pipe repair in your home
11:55and you do not have the cash for it. So these are all signs, yeah, to say that I'm not,
12:01I cannot sustain
12:02any disruptions and I cannot sustain my income. So when we face this continuously, I think there are
12:11things that we really need to look into. Don't just wait that I miss a payment or then I'm in
12:16problem, but I can sustain, but without zero savings, with no savings, with continuous borrowings.
12:26So these are actually, for me, these are the best early signs to say that I really have to re
12:31-look
12:31at my finances. And definitely something which consumers across the board need to internalise,
12:36especially if they're going into BNPL or they already have a couple of different existing BNPL
12:42accounts. Thank you for the conversation so far, Nirmala, as well as Anil. We take a quick break.
12:46We'll be back right after with the rest of the interview. Don't go anywhere.
13:04Welcome back to Niagara Spotlight. Still with me, Tamina Kaljian. Today, the discussion is around BNPL,
13:09buy now, pay later, and whether it is a convenience for customers or a little bit more of a credit
13:15risk.
13:15Going back to the live conversation, so Anil, now one reason why BNPL has grown so quickly is the
13:22seamless checkout experience in-app, especially for purchases, right? So how can the industry also
13:28play its part by ensuring that convenience is encouraging informed financial decisions?
13:35Okay. In the first place, Malaysia's BNPL adoption model is actually one of the most conservative
13:41in the region. Firstly, there's no fixed, there's no, if you don't pay, you get your account blocked.
13:48There's no minimum payment, so you can't stretch it out into perpetuity. So that's one thing. Secondly,
13:53the late fee is a fixed amount as well. It doesn't go on balance, unlike credit cards, unlike any of
14:00the
14:00other loans, which is a percentage on the outstanding. So it's a very conservative model that's been applied.
14:04The other thing that is also very important is to have the customer journey mapped out with some
14:11guardrails. So you can have guardrails at the point of checkout, which alerts the borrower to just take
14:18a pause in his journey. And these are sometimes built by the developers themselves. So these guardrails
14:24allow you to take maybe an affordability assessment, right? Okay, fine. If I take this particular
14:30transaction that this goes through, what does my service ratio become? What does my total
14:34indebtedness become? So these tools are already available, especially with AI today, they can be
14:39modelled out instantaneously. And these guardrails allow the consumer to really be able to take charge
14:45of their finances. Ultimately, lending is a consumer choice. Technology will always try to make it as easy
14:53as possible. The holy grail of technology is to make our lives as easy as possible, not just with lending,
14:58but with everything we do, because we want to have a frictionless world, we want to have infinite
15:02time. But the ultimate thing is the education, the literacy, and that part, you see a lot of
15:09BMPL players who are paying attention to that. They are working with the regulator to make sure that
15:14the people know the disclosures are transparent, they've written very well that these are the consequences,
15:21and all of these things are all together embedded into the technology. So I think that's where we are at
15:26with
15:27that. Absolutely. So it's also interesting to know that at the same time, regulators will have that
15:33broader financial framework. Nirmala, now around 40% of the BMPL users and the transaction makers
15:40are adults who are aged under 30 and below, many of whom are still building their long-term financial
15:46habits. So this is a really opportune moment as well. And how, in your opinion, does financial
15:52education need to evolve now in Malaysia so that younger Malaysians are then developing healthy
15:59credit behaviours? We've had one long cycle from the credit card era, now it's the BNPL era.
16:06I mean, all of us were credit card users at the Pioneer, I would say. And I realise now that
16:15I wish I had the
16:15education then or the knowledge then in order to have it better now. Financial education is a lifelong
16:24skill actually. So it's a skill that it has to be a continuous education and it has to also be
16:33provided in all the platforms. So like Anil pointed out earlier, the providers could also provide the
16:40education there or the awareness that we call it just-in-time education or it's an intervention
16:45at that point of time before I make the decision, should I continue with this purchase or not? So
16:51that's why that's like just-in-time. But we also want them to think about the big picture. We also
16:57want
16:57them to know, hey, overall, where am I going? Where am I heading to? What should I be concerned of?
17:03You
17:03know, the whole spectrum of financial planning, looking at my goals, looking at setting up goals,
17:09looking at protecting my assets, growing my assets and stuff like that. So that's like the big picture.
17:15So we strongly believe that financial education literacy programmes could really help
17:21our youth. And we have done a few programmes that we saw results actually because we took up a group
17:30of students from higher learning institutions and we did this programme over three months with
17:36gamification, like you have to get them to where they want to be. So it's not really a classroom
17:41education, but more of an action-based education. Like you do things, okay, if I'm going to do this,
17:49what are you going to do? So we started up saving challenge that's very minimal. We're looking at
17:53a ringgit a day. So yeah, we try to start up and- Start small by instructional. Yeah, start small,
17:58but consistent is the right word. You know, so you want success, you have to be consistent,
18:03even no matter how small you start. So, but what we saw was really great that we saw students who
18:08actually complained, hey, how to save? You know, I don't even have enough to eat. But by doing it
18:14consistently, we saw changes. And then also, we saw an increase in their response. Of course,
18:22you don't see a drastic issue. Oh, I can save thousand ringgit. You have to be realistic. But
18:26they saw their need, they realised the need that they need to save for emergencies now. So we saw
18:33good increment in terms of percentage when it comes to this. So education with the right intervention,
18:39the right, right in time, just in time interventions would definitely help people be more aware. It's
18:47just like any other things that we do. We talk about safety, we talk about wearing your seatbelts,
18:52wearing your, coming into those kind of habits. It took a while, but now by automatic, by default,
18:59the car rings the alarm. So if you don't put on your seatbelt, the car makes the alarm, right? So
19:05in terms of education and making decisions, so it has to also come in continuously
19:12at times when you are making decisions and also looking at the big picture.
19:17So speaking about making decisions as well, everything which Nirmala has emphasised, Anil,
19:22what do you, what would you say about having a sort of a digital dashboard available for all BNPL users,
19:29so you can kind of have a consolidated overview of all the ongoing commitments that you have?
19:35Absolutely. I mean, in fact, that's what I think the regulator is working towards as well.
19:39Right. Good to know.
19:40And with the technology available today, they can just API with all the service providers,
19:43and they can have real-time dashboards which will enable them to assess.
19:47So you don't have to move between app to app, payment to payment.
19:49We can integrate all into the app. In fact, you could also do some credit scoring and how the
19:54credit score changes with that purchase. Right.
19:57So for example, your credit score is 4.0, but if you were to take this, it moves you here.
20:01If you were to default here, it moves you down here. Yes.
20:04And financial inclusion always is a double-edged sword, right? Because at the one point,
20:08you want to include more of the unbanked, what we call thin file credit scores. They don't have
20:14credit scores. So how do you get someone a credit score who doesn't have one? They don't have a pay
20:18slip, they don't have regular income. So BNPL does help because then you have an overlay
20:22that allows them to credit a credit score and graduate. Yes, exactly.
20:27Graduate and then they can go to a bank. And we use alternative scoring methodologies as well.
20:32You know, there's social media usage, tracks handphone usage. There's all these overlays today
20:36that are available. But again, it comes to then literacy. You can't escape literacy. But what the
20:43technology can provide is the dynamic tool that allows them to monitor their literacy in a way that
20:49was never before possible. Exactly. And outside of an overall digital dashboard, what would be some
20:55other areas in which the industry can hopefully strike a better balance between improving the
21:01access to finance, but at the same time also ensuring consumers are not taking on more than
21:07they can comfortably manage? So I think those alerts make sense. So once we have embedded that
21:12technology within the app, there's that alert because some of these impulse purchases are exactly
21:17that I don't think about it or I postpone a problem. But if I could see where that problem is
21:22leading me,
21:23like if I see a car crash coming, I'm likely to take some braking or put my seatbelt on. So
21:30I see,
21:31I think the consumer doesn't see that length of time. But today we can model that. We can, all the
21:35scenarios are
21:35infinitely possible. So I think that's where, and gamification is important too, for the younger
21:40people. It's like, you know, if I do this, these are the consequences. So that scenario planning comes
21:45in. And that technology is easily integrated today. And that's where the responsible part comes in from
21:50the BNPO players, something that the regulator is also talking about already. And I think the licensing
21:56framework makes a lot of sense because then also they can, unlicensed there are predatory practices by some
22:02lenders. And here, at least they have a control over who is behind it, what they're doing. And then there's
22:09a constant
22:09engagement with, uh, to make sure the literacy rates remain very high.
22:13Yeah. And it's all coming in very soon by, uh, before year end,
22:17the 30th of November.
22:18Yes, very fast.
22:19So then, uh, moving into looking at, uh, Nirmala, BNPL is also then promoted quite often as an interest-free
22:25payment option.
22:26Uh, but at the same time, every form of credit still requires rather disciplined financial planning.
22:32Uh, would you say there is any practical framework that could be recommended for consumers then for
22:38deciding when using BNPL might be appropriate and when actually deciding it may be better to avoid or
22:46differ taking on another repayment commitment?
22:50Uh, any kinds of loan, BNPL falls under that. So whenever we want to look into any kind of loans
22:58or
22:58any kind of credit that we are going for. So we used to go with the 3P kind of, uh,
23:05formula,
23:06but I'm going to go with PACE now, with P-A-C-E. So the first P, first and foremost
23:11is look at the
23:12purpose. Why am I taking this? Like I mentioned earlier, if it's something to increase my, uh, income,
23:18or is it something that's going to help me increase my net worth? Then yes, you can proceed.
23:23Right. But within your affordability, which is the A that comes in. So mainly it's something within
23:29your affordability. Right.
23:30So it's really good if the platform could actually provide an overview thing to say, hey,
23:35if I were to take this, how is it going to disrupt my overall credit score? And how, how am
23:40I?
23:40Because there is always this huge gap of, of what is offered to me and what I can really afford.
23:48There is this gap because when, uh, I mean, marketers are offering you things, institutions
23:54are offering you, but they do not, you know your overall situation, only you know your overall
23:59situation. Like, you know what other loans and what other debts that you have that may not even
24:04be this formal thing. You probably owe somebody something and things. So you really need to calculate
24:09this affordability. And we always stick with the formula of 40% of your income. But that is also for
24:16those who are earning 5,000 and above, but those who have just started, you really need,
24:20you can't take a 2,000 ringgit income and take 40% loan that you really don't have enough for
24:26your
24:26living expenses. So you really have to calculate the affordability. So even though the amount is small
24:32and you would say, uh, it's okay. Right. Starting small can also lead to huge amounts. Right. So
24:40affordability is the second part. And of course, C is your commitments. So what are the commitments
24:44do you have? Your long term commitments, your short term commitments, your education loan,
24:49your, uh, if you're going to take a higher purchase. So you've got to ensure that you can
24:54really pay up because regulations are coming in where it's going to be transparent everywhere.
25:00So if you default here, the others would know and it will destroy your, I mean, it will kind of
25:05ruin
25:06your, your credit score as well. So commitments elsewhere and everything that you really have to look.
25:12And sometimes they are not, they are not, uh, commitments that you see your commitments to
25:18your family, your parents, your stuff. So you also have to, it's more automatic rather than,
25:23you know, put down in a framework, put down in a framework, really write down a lot of mistakes
25:28that, uh, I see people do is like we calculate, you know, mind, like we think, yeah, this is there,
25:34this is, yeah, I can manage this and that. And there are hidden commitments as well. For example,
25:39you, you think you own a house, but you only need to pay your installment, but there are other expenses
25:44that comes with the house as well in terms of maintenance fees and stuff like that. So those
25:49commitments also need to be calculated in. And, uh, so you look at your commitments, right?
25:54And the last E is emergency. So I, I always say like, if I'm going to commit to pay 100
26:02ringgit for this,
26:04if there is an emergency, do I have another 100 ringgit that I can use? Because emergencies happen
26:11all the time. And also if the answer to that last question is a no, then basically you should know
26:17not to because emergencies happen all the time, even small, big or whatsoever. But if you're not
26:24prepared for an emergency, that's where you go for more loans and you, you end up using more funds
26:31than what you can really afford to. So emergency is one question I have to ask myself. If I'm going
26:37to
26:37commit for this now, do I have the emergency savings? If something were to happen, do I have the same
26:43amount? And if this thing is really not that important to me now, I can actually postpone the
26:50purchase. It's not to say no, but you can always delay gratification. Absolutely. So really balancing, um,
26:56the accessibility to technology innovation with, of course, your daily consumer needs. Thank you very much,
27:01Numala, as well as Anil for the discussion. Now, of course, um, to conclude as digital finance becomes an
27:07increasingly important part of everyday life, BNPR credit services will continue to expand, but
27:13must be responsibly used and regulated to avoid unmanageable consumer debt, especially for lower
27:18income Malaysians. Well, that's all we have time for today on Niagara Spotlight. I'm Tamina Koushi,
27:23signing off for now.
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