BY JACINTHA JOLENE & ALEXANDRA LORNA
PART 1
● In the first of a three-part series, we examine the rapid rise of Buy Now, Pay Later services and unpack what they really mean for consumers.
MALAYSIA has experienced robust double-digit year-on-year growth in the adoption of Buy Now, Pay Later (BNPL) services, with Atome Malaysia alone recording four million registered users.
Platforms such as Atome, Grab’s PayLater, Shopee’s SPayLater, and others have made it easier for consumers to access products immediately while deferring payment, often interest-free through flexible installment plans.
For example, customers looking to purchase the latest tech gadgets or a new handbag can split the cost into monthly payments or choose to pay in full by the end of the month or the next. However, late payment fees may apply if payments are not made on time.
It’s widely employed not just for discretionary items but as a financial tool to manage emergencies and cash flow.
While most users repay without issue, the steep rise in usage, even in non-traditional sectors like travel and healthcare, raises concerns about over-extension among financially illiterate or low-income individuals.
Age group and buying patterns
According to Danny Lim, head of BNPL at Atome Malaysia, he said 80 per cent of registered users are of age 25 to 40 with average ticket size between RM100 to RM200 per transaction.
About 55 per cent registered are female users with the majority paying with debit cards.
Products commonly purchased using Atome, Lim finds, include buying from e-commerce platforms, fashion, beauty, travel, insurance and home essentials.
These trends reflect a preference for everyday and lifestyle-related items, indicating that users are incorporating BNPL into routine and planned spending rather than large or impulsive purchases.
Key benefits of using BNPL
Lim outlines the key benefits from two perspectives.
From the consumer side, he said Buy Now, Pay Later (BNPL) offers interest-free instalments, flexible payment options, and improved cash flow management—without the need for a credit card.
“It also opens access to credit for individuals typically underserved by traditional banks, such as gig workers, young professionals in their first jobs, or those handling major life expenses like purchasing their first home or welcoming a first child.
“Atome also rewards users with Atome+ loyalty points and discounts,” Lim added.
From the merchant’s perspective, Lim explained that Atome helps boost sales, attracts a new segment of customers, and increases marketing visibility through its platform.
He noted that Atome also assumes the credit risk, allowing merchants to receive upfront payments while customers pay over time.
According to the Consumer Credit Oversight Board (CCOB), there are 16 BNPL providers, including four Shariah-compliant BNPL providers as of June this year.
More than 90 per cent of active BNPL accountholders are concentrated among three major BNPL schemes namely SPayLater (56.5%), Atome (26.5%) and PayLater by Grab (8.3%).
The Downsides of BNPL and How to Stay Within Budget
While BNPL poses several advantages to users, it’s important to be aware of the potential financial pitfalls that come with deferred payments.
As BNPL is a form of credit, Lim advised that it should be used responsibly and purchases should be planned for in the monthly budget.
“Always pay on time, every time to avoid accounts being suspended or charged late fees.
“Other methods include using auto-deduction features linked to debit or credit cards so as to not accidentally miss payments,” he said.
With concerns over rising personal debt, Lim said Atome underwrites every transaction and pays the merchant in full within two days.
“So risk management is paramount to ensure customers can pay on time, all the time,” he said.
Lim added that risk management is implemented at multiple stages, both before and after a customer’s purchase.
In the before purchase process, the first step of risk management is Customer KYC (Know Your Customer), which helps Atome, as a provider, to ensure users are legitimate and creditworthy before allowing them to access installment plans.
He said common KYC steps include identity verification and documents such as identification card, date of birth, verified home address and others.
Lim said the second stage involves fraud risk assessment.
“We look out for anomalies in the account opening or payment process to weed out bad actors. Essentially, we ask: are you who you say you are, or are you trying to commit fraud?”
The third stage addresses credit risk, where Atome determines a suitable spending limit for each user based on their credit history, spending behaviour and repayment record.
“We assess what’s a safe credit limit we can extend to you and whether you’re managing that responsibly,” he explained.
The fourth stage, he said, focuses on transaction-level risk, particularly for higher-risk categories such as travel, electronics or jewellery.
“Based on what we know about your profile, we evaluate whether a particular purchase is too costly for you or falls outside your usual spending pattern,” he added.
Post-purchase, Atome continues to monitor user behaviour through several safeguards to encourage responsible repayment.
“We send regular reminders via SMS, email, and in-app notifications to help users stay on top of their payment schedule.
“If a user falls behind, their account may be frozen to prevent further spending,” he said.
He added that in cases of prolonged overdue payments, Atome reports the account to the credit bureau.
“This step helps prevent users from overspending across multiple BNPL platforms and encourages more responsible financial behaviour,” Lim explained.
While the use of BNPL services is growing, Lim noted that it still makes up a very small portion of overall household debt.
“According to CCOB, BNPL accounts for just 0.2% of household debt,” he said.
“Still, we always remind consumers to use BNPL responsibly, especially when managing it alongside other financial commitments like home loans, vehicle financing, or credit cards.”
Assessing user’s creditworthiness
When it comes to assessing a customer’s creditworthiness before approving a BNPL request, Atome combines both traditional and alternative methods.
“In addition to the risk checks we conduct at various stages, we also refer to credit reporting agencies such as Credit Tip-Off Service (CTOS) and Experian as part of our credit assessment process,” said Lim.
“For customers who are unbanked or have limited credit history, we leverage alternative data and analyse over 1,000 data points to dynamically assess credit risk and assign a lower spending cap.
“This approach allows us to support financial inclusion while still lending responsibly,” he explained.
Lim also highlighted the upcoming Consumer Credit Act (CCA) as a positive development for the BNPL industry.
“The CCA will help standardise how consumer credit data is collected and reported across the industry, bringing BNPL practices closer to those of traditional financial institutions,” he said.
“It will also raise the overall standards of data collection within the BNPL sector to be more aligned with the banking industry.”
Debt prevention and promoting responsible spending
To help prevent users, especially younger or first-time credit users from falling into a debt trap, Atome has built safeguards into its business model and risk management processes.
“We don’t charge compounding interest, and our late fee is capped at RM30, which is only meant to cover operational costs. This is in line with the CCOB guiding principles,” he said.
“Our risk model is also designed to enable early intervention when we detect signs of repayment stress.”
Lim said that Atome remains cautious when onboarding new or younger users.
“We start them off with lower spending caps and only relax those limits gradually as they demonstrate responsible spending and repayment behaviour,” he explained.
“This helps protect vulnerable users while encouraging healthy financial habits.”
He also noted that, according to CCOB statistics, fewer than 1% of BNPL users are unable to repay their installments in full, a figure that aligns closely with Atome’s own data.
Beyond credit risk management, Atome is also taking steps to promote financial literacy among its users, particularly those from underbanked segments who may lack traditional financial education.
“We recognise the importance of making financial tools and information accessible,” Lim said, adding, “that’s why we have taken a multi-faceted approach to user education.”
This includes making the Atome app intuitive and transparent, with clear payment schedules, frequently asked questions (FAQs) on the website, and frequent reminders via in-app notifications, SMS, and email.
“We also launched Malay language support in 2022, acknowledging the need to cater to a broader demographic,” he added.
Lim said Atome actively shares educational content through social media platforms, such as instructional videos and guides on how to use the app responsibly.
The company also supports broader initiatives, including sponsoring the 2022 RinggitPlus Financial Literacy Survey on personal finance habits.
“We’re committed to working with industry partners like the Fintech Association of Malaysia and regulators to further our financial education efforts,” Lim said.
Citing the CCOB 2024 survey, he said 98% of BNPL users believe it is a simple and easy-to-manage financial product and that reflects the importance of maintaining clear, responsible, and transparent practices.
● The second part of this series will focus on why users depend on BNPL services including insights into their spending habits and financial priorities.
