South Africans are embracing ‘Buy Now Pay Later’ services, but experts warn of hidden debt, legal grey areas, and a lack of regulation that may expose consumers to financial risk.
Is ‘Buy Now Pay Later’ Too Good to Be True?
The Hidden Risks of This Payment System Taking South Africa by Storm
Once considered a revolutionary shift in retail finance, “Buy Now Pay Later” (BNPL) is now under scrutiny in South Africa. While it offers consumers a seemingly easy route to interest-free purchases and instant gratification, legal experts and financial regulators are raising red flags about its long-term impact on consumers and the financial ecosystem.
What Is ‘Buy Now, Pay Later’ and Why Is It Popular?
BNPL is a payment method that lets consumers purchase items immediately and pay in interest-free instalments over several weeks. Unlike traditional credit cards or store accounts, BNPL often skips formal credit checks and affordability assessments. With just a few clicks, consumers can walk away with anything from sneakers to smartphones, paying only a fraction upfront.
In South Africa, the model has exploded in popularity, fuelled by its frictionless nature, sleek mobile platforms, and appeal to underbanked or younger shoppers.
But according to experts from Webber Wentzel—Lerato Lamola and Anél De Meyer—the system is skating on thin legal and ethical ice.
Legal Grey Areas: Who Regulates BNPL in South Africa?
BNPL sits in an awkward limbo between the National Credit Act (NCA) and the Financial Advisory and Intermediary Services (FAIS) Act. The National Credit Regulator (NCR), which usually enforces credit rules, has not clearly defined BNPL as a credit provider. Meanwhile, the Financial Sector Conduct Authority (FSCA) has also been slow to act, since BNPL operators don’t technically offer financial advice.
Lamola and De Meyer point out that BNPL platforms often bypass regulations by claiming they’re merely offering deferred billing or payment solutions rather than traditional credit.
“The platforms argue that because they don’t charge interest and operate on short-term cycles, they fall outside traditional credit laws,” they explain.
As a result, these fintech platforms enjoy significant freedom—but consumers face a complete lack of protection.
READ: 8 Expert Tips for Investing in South African Commercial Property in 2025
Consumers at Risk: Late Fees, No Recourse & Misleading Contracts
Most South Africans are not aware of what they’re truly signing up for. While the zero-interest pitch may sound great, late fees, changing terms, and the collapse of BNPL providers can quickly lead to financial disaster.
Without formal affordability checks, users—especially those without stable income or a strong credit history—can fall into a trap of rolling debt. The absence of a central regulator also means no guarantees, no dispute channels, and often no clarity in the fine print.
“The risk is that regulatory blind spots allow only the biggest players to comply, while smaller or foreign BNPL providers operate under the radar,” the legal duo cautions.
Future Fixes: Will the COFI Bill Save the Day?
South Africa’s much-anticipated Conduct of Financial Institutions Bill (COFI Bill) might provide the structural overhaul the system desperately needs. If passed, it could define BNPL as a credit product and subject it to formal consumer protection mechanisms, including:
- Mandatory affordability assessments
- NCR registration
- Clear dispute resolution processes
- Cooperative oversight between FSCA and NCR
Lamola and De Meyer emphasise that cross-agency collaboration is crucial. Without it, the South African financial system risks systemic vulnerabilities and unchecked consumer exploitation.
Digital Finance’s Double-Edged Sword
BNPL offers convenience, speed, and accessibility. But without proper regulation, these perks can become financial pitfalls.
South Africa must avoid the same mistakes that accompanied previous microcredit booms, which disproportionately affected lower-income and underbanked communities. A digitally connected consumer base deserves transparent, safe, and responsibly governed payment systems.
“Buy now, pay later redefined consumer finance,” Lamola and De Meyer conclude. “But the price of progress must not be paid by the poorest.”
Final Word
As the BNPL trend grows in South Africa, the need for clear legal frameworks and consumer education has never been more urgent. If you’re planning to ‘buy now,’ be sure you don’t ‘regret later.’ The system might be empowering—but only if you fully understand what you’re signing up for.
Also read: Bad Credit Doesn’t Mean No Credit: Your Guide to Blacklisted Loans in South Africa