MicroFinance South Africa (MFSA) is urging regulators to act swiftly on the unchecked and rapid rise of Buy Now, Pay Later (BNPL) credit services. It says this largely unregulated system is exposing millions of South Africans to unsustainable debt, hidden costs, and financial exploitation, particularly affecting low-income workers, young consumers, and an already over-indebted population.
MFSA is the largest microfinancing association in South Africa, representing more than 1 500 registered microfinance credit providers and service providers to the industry.
BNPL allows shoppers to pay for products in instalments over a set period, often interest-free and without service fees.
Although promoted as a modern, convenient payment option, it functions as credit that is not subject to the core protections of the National Credit Act (NCA), MFSA says. BNPL’s status under the NCA or the Financial Advisory and Intermediary Services Act remains unclear. The Intergovernmental Fintech Working Group has noted that BNPL sits in a regulatory void, with the National Credit Regulator and Financial Sector Conduct Authority each overseeing separate, unrelated laws.
Read: Buy now, panic later: a legal deep dive into SA’s payment revolution
MFSA has observed individuals stacking multiple BNPL products without affordability checks, credit bureau reporting, or understanding of the long-term costs.
Consumers often do not realise they are entering into credit agreements because of the way these products are marketed and the absence of formal disclosures. The convenience and speed of BNPL, where users can access up to R30 000 in credit in under three minutes, masks the deep structural risks it poses to both consumers and the broader credit ecosystem.
Market trends indicate that BNPL is expanding beyond luxury or e-commerce spending, such as fashion and electronics, and is now being used for essentials, including groceries, utilities, transport, and healthcare. MFSA says this development signals an alarming dependency on unregulated debt for basic living expenses.
According to the association, some platforms issue more than 100 000 new accounts a month, with approval rates ranging between 50% and 70%. Penalty fees are charged weekly, with some platforms capping late fees at R255 per transaction.
“Without urgent intervention, this growing shadow credit system could lead to devastating consequences,” said Leonie van Pletzen, the chief executive of MFSA. “South Africa is now at a critical crossroad. Either allow BNPL to continue growing unchecked or proactively regulate it to protect consumers and maintain the integrity of the financial system.”
To address these concerns, MFSA recommends bringing BNPL products under the protection of the NCA through urgent regulatory measures. These include:
- 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; and
- access to a dispute resolution mechanism, such as an industry ombudsman, for affected consumers.
MFSA says the 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. Global markets are already moving in this direction, and if we act now, we can ensure that BNPL serves consumers rather than allowing it to continue exploiting them,” Van Pletzen said.
