MicroFinance South Africa (MFSA) has raised concerns over the rapid growth of Buy Now, Pay Later (BNPL) credit services, warning that the largely unregulated sector is exposing millions of South Africans to mounting debt, hidden fees, and potential financial exploitation.
MFSA highlights that BNPL’s expansion poses significant risks, especially for vulnerable groups such as low-income earners, young consumers, and those already burdened by debt.
Unlike traditional credit products, BNPL offerings often bypass key consumer protections, creating a “shadow credit” system that lacks adequate oversight.
Buy Now, Pay Later services allow consumers to pay for purchases in instalments, frequently without interest or visible service charges.
However, the MFSA points out that many users accumulate multiple BNPL credits without affordability checks or reporting to credit bureaus, making it difficult to assess their true financial commitments.
Regulatory uncertainty surrounds BNPL, as it currently falls between the mandates of the National Credit Regulator and the Financial Sector Conduct Authority.
This gap leaves consumers vulnerable, with no clear protections under either the National Credit Act or the Financial Advisory and Intermediary Services Act.
Increasingly, BNPL credit is being used for essential expenses, including groceries, utilities, transport, and healthcare, signalling a worrying reliance on unsecured and unregulated debt to cover basic living costs.
Many consumers reportedly do not fully understand that they are entering credit agreements, partly due to aggressive marketing and lack of formal disclosure.
BNPL platforms can approve credit of up to R30,000 within minutes, with some providers opening over 100,000 new accounts monthly. Approval rates range between 50% and 70%, with late payment penalties capped at approximately R255 charged weekly.
In response, MFSA is calling for tighter regulation of BNPL services. Key recommendations include subjecting providers to the National Credit Act, requiring mandatory affordability assessments, full credit bureau reporting, standardised disclosures, licensing or registration, and access to independent dispute resolution mechanisms.
MFSA warns that South Africa stands at a critical juncture: without prompt regulatory intervention, the unchecked growth of BNPL could have devastating consequences for consumers and the broader financial system.
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