More Than Half of Malaysians Turn To Informal Lending To Survive
A recent survey of over 40,000 Malaysians has laid bare a financial reality long hidden beneath the economic statistics: For many, access to formal credit remains out of reach, pushing them toward informal and often risky borrowing practices to make ends meet.
The findings, released by a prominent Buy Now, Pay Later (BNPL) service, paint a stark picture. At one point, more than half of Malaysians lacked access to formal credit, forcing them to rely on pawnshops, unlicensed moneylenders or borrowing from family and friends.
However, the rise of digital BNPL solutions like SPayLater appears to be shifting the landscape, offering a lifeline to those previously locked out of the formal financial system.
According to the data, 63% of users who previously depended on informal borrowing no longer feel the need to do so since using SPayLater. The service has helped to unlock access to short-term credit, especially for those excluded from the traditional banking system.
Yet, the data reveals a persistent divide: 55% of respondents still lack access to traditional credit services beyond BNPL, exposing a growing reliance on alternative financing tools amid limited options from conventional banks. This is further exacerbated by the 18% of users who either do not use or cannot access banking services at all, and another 12% who say their credit needs are unmet by the banking system.
For many Malaysians, short-term credit has become not just a convenience but a necessity. 59% consider access to credit essential for purchasing everyday necessities, a sentiment amplified during times of financial stress. A striking 81% of users have relied on SPayLater to weather financial shocks, such as emergency medical expenses, vehicle repairs, baby formula and insurance renewals.
Further exploring why users use BNPL, the survey found that: 57% use SPayLater to better manage their monthly cash flow
46% use it to bridge the gap between paychecks
32% use it to handle unexpected expenses
10% use it to fund small business operations
Importantly, most users approach BNPL with discipline. 93% of respondents budget for their repayments, treating them like monthly utility bills. As a result, 89% say it has helped them manage their spending and 95% credit the service with improving their debt management skills, a promising sign for Malaysia's broader push toward financial literacy.
This financial discipline is having measurable effects. National BNPL delinquency rates dropped from 5.3% in 2023 to 2.6% in 2024, according to the Consumer Credit Oversight Board, a trend that mirrors the decline in late payments reported by SPayLater users.
Still, the data reflects a complex relationship with short-term credit. While 42% of users say BNPL gives them more control over their finances, a smaller segment, around 2%, expressed anxiety about needing credit just to afford basic necessities.
The solution, many say, lies in greater integration of BNPL services into essential sectors, pointing to an urgent need for credit access in areas tied directly to daily living.
As Malaysia continues its journey toward a more inclusive digital economy, these findings spotlight a critical question: Can the financial system evolve fast enough to serve those left behind? If BNPL's growth is any indication, the demand is not just real, it's urgent. Related
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