A Wake-Up Call: Unregulated Buy Now, Pay Later Credit Services Could Trigger A Financial Crisis

“Without urgent intervention, this growing shadow credit system could lead to devastating consequences,” says Leonie van Pletzen, Chief Executive Officer of MFSA. “This is especially concerning for low-income workers and young consumers, and an already over-indebted population.”

“BNPL is presented as a modern, interest-free payment solution, however in reality it functions as credit,” she states. “Unfortunately, it is credit that is not subject to the core protections of the National Credit Act, and we are seeing individuals stack multiple BNPL products, often with no affordability checks, no credit bureau visibility, and no understanding of the long-term cost.”

Market trends show that BNPL is expanding far beyond luxury or e-commerce spending, and is now being used for essentials such as groceries, utilities, transport, and healthcare.

“This signals an alarming dependency on unregulated debt for basic living expenses,” warns van Pletzen. “BNPL users are often unaware they are entering into credit agreements, due to the way in which these disguised products are marketed and the absence of formal disclosures.”

The convenience and speed of BNPL, where users can access thousands of rands in credit in under three minutes, masks the deep structural risks it poses to both consumers and the broader credit ecosystem.

“South Africa is now at a critical crossroad,” says van Pletzen. “Either allow BNPL to continue growing unchecked, or proactively regulate it to protect consumers and maintain the integrity of the financial system.”

Key statistics:

• Some platforms issue 100 000+ new accounts per month;
• Approval rates range between 50% and 70%;
• Consumers can access up to R30 000 in under three minutes;
• Penalty fees are charged weekly, with some platforms capping late fees at R255 per transaction;
• BNPL is now being used across sectors: from fashion and electronics to groceries, medical care, and utilities.

MFSA’s recommendations:

To bring BNPL products under the protection of the National Credit Act (NCA), MFSA recommends the following urgent regulatory measures:

• Mandatory affordability assessments to prevent unsustainable debt;
• Full credit bureau reporting to ensure complete visibility of consumer obligations;
• Standardised consumer disclosures, making it clear that BNPL is a form of credit;
• Licensing or registration of all BNPL providers under the NCA;
• Access to a dispute resolution mechanism, such as an industry ombudsman, for affected consumers.

MFSA warns that failure to regulate BNPL could result in another wave of over-indebtedness, market instability, and irreversible harm to financially vulnerable households.

“South African consumers deserve transparency, affordability protections, and accountability from all credit providers, including those offering BNPL,” concludes van Pletzen. “Global markets are already moving in this direction,[1] and if we act now, we can ensure that BNPL serves consumers rather than allowing it to continue exploiting them.”