BNPL (Buy Now, Pay Later) burst onto the scene as a game-changer, transforming how consumers shop and pay over time. What started as a consumer-friendly alternative to traditional credit is becoming a more concrete financing solution in the digital payments ecosystem, particularly in emerging markets like BNPL regulation in Asia.
Research and Markets projects that the Buy Now, Pay Later (BNPL) market in the Asia Pacific region will experience significant growth, expanding at an annual rate of 14.5% to reach an impressive $211.7 billion in 2025. However, as the BNPL payment model evolves, so do the challenges and opportunities surrounding it.
The big question is this: Can BNPL providers find the sweet spot between rapid growth and responsible lending, or will it take stricter regulations and enforcement to truly protect consumers?
BNPL Regulation in Select Asia Pacific Markets
The era of limited or unchecked BNPL expansion is coming to an end. Regulators are stepping in to impose stricter consumer protection measures, aiming to curb overspending and prevent debt traps. Here’s how select markets are responding in the Asia Pacific region.
Singapore: Maturation Amid Self-Regulatory Guardrails
The Monetary Authority of Singapore (MAS) has taken an approach which aligns with the BNPL Code of Conduct, developed under its wing by the Singapore Fintech Association. As of 1 November 2023, all new and existing BNPL service providers must ensure full compliance.
However, as scrutiny intensifies, questions remain on whether stricter lending laws will be introduced.
In a recent parliamentary meeting on 4 February 2025 on reports pertaining to non-compliance of the BNPL Code of Conduct and data on BNPL customers, Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of MAS shared the following:
The Buy Now, Pay Later (BNPL) Code of Conduct was created by the Singapore FinTech Association (SFA) and the BNPL industry, with guidance from the Monetary Authority of Singapore (MAS). It sets standards to reduce debt risks and protect users.While compliance is voluntary, the SFA offers accreditation for BNPL providers through independent assessments. Since May 2024, all four BNPL providers in Singapore have been accredited as compliant with the Code.An independent oversight committee of qualified members investigates suspected Code breaches by accredited BNPL providers. Providers found in breach risk losing accreditation. MAS understands from the SFA that no breaches have been reported so far.MAS does not track the number or profile of BNPL users who fully utilise their limit. Consumer protection measures in the Code, like suspending users from making more BNPL purchases if they miss payments, help reduce the risk of excessive debt. Similarly, MAS’ rules on unsecured credit, such as suspending credit cards for borrowers who are over 60 days late on payments, also play a role in managing risk.
According to Yahoo Finance, Singapore’s BNPL market is forecasted to reach just US$2.9 billion by 2027, as its well-established financial system and easy access to traditional loans slow down its BNPL growth.
Malaysia: Exponential Growth Meets Regulatory Onset
The Malaysian government has acknowledged the rapid expansion of BNPL services, with transactions rising to MYR7.1 billion (S$2.129 billion) in H2 2024, mostly from users earning less than MYR5000 monthly (S$1499.73) and between 21-45 years of age.
In response, the Consumer Credit Commission, a joint task force including the Ministry of Finance (MOF), has introduced new regulatory measures to ensure responsible lending and consumer protection.
During a Dewan Negara session on 11 March 2025, Finance Minister II Datuk Seri Amir Hamzah Azizan provided key insights into Malaysia’s BNPL landscape and ongoing regulatory efforts:
As of December 2024, 5.1 million Malaysians actively use BNPL, with most earning below RM5,000 per month and aged 21 to 45 years.BNPL financing stood at MYR2.8 billion (S$0.84 billion), accounting for 0.2% of total household debt, while outstanding BNPL loans amounted to MYR82.6 million (S$24.79 million) (2.9% of total BNPL credit).The Consumer Credit Bill, introduced in the Dewan Rakyat on 4 March 2025, aims to regulate BNPL providers under the Consumer Credit Commission. Key provisions of the bill include transparency in fees, fair credit terms, ethical lending standards, and regular payment reminders.
While BNPL loans remain at manageable levels, regulators are closely monitoring the sector’s impact on household debt. If enacted, the Consumer Credit Act will introduce greater oversight of non-bank credit providers, ensuring BNPL users are protected from financial risks.
Malaysia is projected to hit high in BNPL growth between 2024 to 2027, by as much as 215%, Yahoo Finance informs.
Indonesia: Market Leader Amid Debt Concerns
Indonesia is introducing stricter regulations for the Buy Now, Pay Later (BNPL) sector in response to growing concerns about young consumers accumulating unsustainable debt. The new rules, rolling out by 1 January 2027, are designed to encourage responsible borrowing and tackle the risks tied to easy credit access.
As of November 2024, total BNPL debt in Indonesia had surged to 30.36 trillion rupiah (US$ 1.8 billion), a 42.68% increase from the previous year, according to Asia News and OJK. However, alongside this rapid growth came a worrying trend. Non-performing financing (NPF), or unpaid debts, climbed from 2.76% in October 2024 to 2.92% a month later.
OJK data also shows that 43.9% of BNPL users are aged 26-35, while 26.5% are between 18-25, with the majority spending on clothing, electronics, and personal care products. Key measures being taken by OJK are as follows:
Minimum age and income requirements: Starting 1 January 2027, BNPL credit will only be available to individuals aged 18 (or married) and above who earn at least 3 million rupiah (US$ 185) per month.Consumer risk mitigation: The regulators are considering raising the minimum age further to 24-25 years old and increasing income thresholds to better align with financial responsibility, according to Asia News.
Experts warn that excessive reliance on BNPL can have long-term financial consequences. Nailul Huda, a digital economy expert at the Center of Economic and Law Studies (CELIOS), highlighted a growing challenge for young Indonesians: unpaid BNPL debts make it harder for them to qualify for home loans.
Since BNPL accounts are now part of Indonesia’s Financial Information Service System (SLIK), missed payments can hurt credit scores, making it harder for borrowers to secure future financing.
According to Research and Markets, Indonesia’s Buy Now, Pay Later (BNPL) market is projected to grow by 13.5% annually, reaching an estimated value of US$8.59 billion by 2025.
Hong Kong: Strengthened Consumer Protection
Hong Kong has introduced key regulations to ensure proper oversight and protect consumers using Buy Now, Pay Later (BNPL) services.
Banks offering BNPL services need to follow key consumer protection measures. These include:
Banks must include the message “To borrow or not to borrow? Borrow only if you can repay!” in BNPL advertising and promotional materials, as already required for other retail and SME loan products.Banks must not imply that BNPL isn’t borrowing. Marketing materials for BNPL products must clearly state they are “credit products.”Banks must clearly show fees and interest charges in BNPL product ads and promotional materials. These costs must be included when calculating the Annual Percentage Rate (APR) for customers. If a BNPL product is advertised as “interest-free,” any extra fees or charges must also be disclosed in the same ad.
Hong Kong’s regulatory approach treats BNPL as a form of credit, ensuring proper consumer protections while relying on existing regulations instead of creating new ones specifically for BNPL.
While specific market size projections for Hong Kong are unavailable, regional data suggests it will likely follow the broader Asia-Pacific growth rate of 14.5% YoY, with the region expected to reach $211.7 billion by 2025.
Australia: Stricter Oversight Model
Australia is implementing significant regulatory changes to its Buy Now, Pay Later (BNPL) industry, aiming to enhance consumer protection and ensure responsible lending practices.
Recent developments include Mandatory Credit Licensing: Starting 10 June 2025, BNPL providers must hold an Australian credit licence and comply with the National Consumer Credit Protection Act 2009. This reclassification acknowledges BNPL as a form of credit, subjecting providers to responsible lending obligations.
Similarly, the Legislative Amendments: The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 extends the National Credit Code to BNPL contracts from January 2025, reinforcing the commitment to safeguard consumers from entering unaffordable credit agreements.
In anticipation of the changes, the Australian Securities and Investments Commission (ASIC) released a consultation paper in February 2025, seeking feedback on draft regulatory guidance to assist BNPL providers in transitioning to the new licensing requirements. Comments closed on 7 March 2025.
Research and Markets predicts that Australia’s Buy Now, Pay Later (BNPL) market will grow at an annual rate of 12.1%, reaching a value of $14.52 billion by 2025.
Why Shoppers Are Rethinking Buy Now, Pay Later Schemes
Once seen as a hassle-free alternative to credit cards, Buy Now, Pay Later (BNPL) is facing increasing consumer scrutiny. Younger users, in particular, are feeling the strain of multiple repayments, while rising awareness of late fees and regulatory changes is shaping how people view these services.
As BNPL adoption grows, so do concerns about debt management, financial risks, and the future of the industry under evolving regulations, which is why BNPL regulation in Asia is pertinent.
Debt Fatigue
Many younger users are experiencing debt fatigue, realising that managing multiple BNPL payments feels similar to juggling multiple credit card debts. In Malaysia alone, nearly half of the BNPL users fell under the age of 30 years.
Similarly, in Indonesia, BNPL providers are expanding their reach to underbanked populations, offering alternatives to traditional credit, but this also raises concerns about debt management.
Missed Payment Consequences
While BNPL was initially marketed as a zero-interest alternative, consumers are becoming more aware of the late fees and potential impacts on credit scores, especially in regulated markets.
In Thailand, BNPL has become popular through social commerce, with instalment payments accounting for a significant portion of purchases, but consumers are also learning about the financial implications of missed payments.
In Vietnam, where BNPL is growing rapidly with a CAGR of 45.2% between 2022-2028, there’s might be a need for clearer regulations to protect consumers from potential financial pitfalls too.
Regulatory Uncertainty
While governments across the Asia-Pacific introduce clearer BNPL regulation initiatives, consumers may also be questioning how the BNPL regulation in Asia changes will affect their access to BNPL services.
This regulatory push could affect consumer perceptions, as users wonder whether zero-interest plans will remain available and whether approval processes will become more stringent, among other things.
A New Era of BNPL Growth or Growing Pains?
Is the BNPL magic fading?
Not at all. BNPL is maturing. What’s happening now is a necessary evolution; forcing the industry to become more transparent, sustainable, and consumer-friendly.
The golden days of little to unchecked BNPLs are almost over. But the next era of BNPL could be even bigger if the industry plays its cards right.
According to KPMG’s Pulse of Fintech H2’24, traditional banks worldwide made significant strides into the buy now, pay later (BNPL) market during the second half of 2024.
Leveraging their established customer bases, proprietary data, and deep regulatory expertise, banks are positioning themselves with a strong competitive advantage over standalone BNPL providers. This shift could drive industry consolidation in 2025, as smaller BNPL players seek rapid growth or acquisition by larger financial institutions.
The future belongs to the businesses that balance innovation with responsibility. For BNPL enthusiasts, the message is clear: the game is changing, but it’s far from over.
Source of image: Edited from Pexels
