Rising buy now, pay later delinquency in Malaysia

Abstract

Between June 2024 and March 2026, the overdue ratio on Malaysian buy now, pay later (BNPL) balances rose from 2.6 to 3.4 per cent, even as unemployment, the median household debt-service ratio and housing-loan impairment improved. This exploratory study examines how much of the increase in arrears reflects portfolio growth rather than a higher overdue rate, and whether changes in delinquency align more closely with broad economic conditions or with characteristics of BNPL users and product use. The analysis draws on published data from Bank Negara Malaysia and the Department of Statistics Malaysia, parliamentary replies and a regulatory survey of users. Because the official overdue ratio is available for only six dates, the study uses an identity-based decomposition and directional comparisons rather than statistical or causal inference. The decomposition shows that, if the December 2024 overdue ratio had remained unchanged, portfolio growth would have accounted for roughly three-quarters of the subsequent increase in arrears; about one quarter corresponds to the higher overdue rate. The macroeconomic evidence is mixed. Real GDP and private-consumption growth slowed in most intervals in which delinquency rose, whereas labour-market, price and household indicators generally moved in the opposite direction. Evidence on borrowers and product use is also mixed. A one-date comparison is suggestive of larger overdue exposures, and 73 per cent of surveyed users earned below RM5,000 a month, but transactions per account did not rise in step with delinquency. Car loans were the only bank-loan category whose impairment moved consistently with BNPL delinquency. These findings do not identify a single cause. They suggest that broad household credit-risk indicators alone may not track repayment stress well when BNPL users are only partly represented in the populations underlying those indicators, and that changes in a delinquency ratio should be interpreted alongside portfolio growth.