The Buy Now, Pay Later (BNPL) industry in South Africa is experiencing unprecedented growth, prompting a call for formal regulation. As this payment model gains traction among consumers, industry leaders are advocating for a structured regulatory framework to ensure sustainability and protect consumers.
PayJustNow, one of the country’s largest BNPL operators, has been at the forefront of this push. The company argues that while BNPL should not be classified as conventional credit, it should be subject to appropriate regulation to mitigate long-term risks and promote financial inclusion.
Rapid Expansion and Consumer Adoption
The BNPL market has seen significant expansion in recent years. PayJustNow alone has over 4 million registered users, with average transaction values around R1,400. Customers typically pay a third of the amount upfront, spreading the remaining payments over a short period, usually six weeks, three months, or six months.
This payment option is now widely available across various retail channels, from fashion and homeware to electronics and healthcare. The convenience and flexibility of BNPL have made it a popular choice, particularly among younger consumers and those seeking to manage their cash flow more effectively.
The Need for Regulatory Oversight
Despite its popularity, concerns are mounting about the potential risks BNPL poses to consumers and the broader credit ecosystem. The South African Reserve Bank has expressed caution, noting that BNPL products could contribute to over-indebtedness due to fewer affordability checks compared to traditional credit products.
PayJustNow’s COO, Dean Hyde, emphasizes the importance of appropriate regulation. “We cannot have a payment product in the market that is completely unregulated when it’s being used by millions of South Africans,” he said. Hyde argues that regulation should be tailored to the BNPL market, which aims to provide financial inclusion rather than replace existing credit products.
Reporting to Credit Bureaus
Industry players, including PayJustNow, have called for BNPL transactions to be reported to credit bureaus. This would allow repayment behavior to be reflected in credit scores, helping consumers build their credit profiles. Hyde notes that the company has been engaging with regulators and industry bodies on this issue for about two years.
“We’ve been wanting to report for the last two years because it allows people to build credit scores,” Hyde said. “But we cannot simply report under the same categories as other credit providers because we’re not a credit product.” PayJustNow claims that approximately 98% of its users meet their repayment obligations, with default rates below 2%.
Balancing Financial Inclusion and Consumer Protection
The rapid adoption of BNPL has raised questions about its impact on financial discipline and repayment behavior. Unlike traditional credit products, BNPL services are often marketed as simple payment options, leading some consumers to underestimate the importance of timely repayments.
Missed installments can result in heavy penalties, and as regulatory oversight increases, repayment behavior on these platforms is likely to play a greater role in shaping an individual’s credit profile. Hyde acknowledges the need to balance financial inclusion with consumer protection, pointing to research by TransUnion showing that about 40% of BNPL users fall into thin-file or underserved credit segments.
“That’s exactly why appropriate regulation matters,” Hyde said. “We don’t want to limit consumers’ ability to access credit, but at the same time, we want to make sure they can build their credit profiles.”
TransUnion’s latest white paper on BNPL suggests that the product is emerging as more than just another payment option. It describes BNPL as a response to changing consumer expectations, the growth of e-commerce, and mounting pressure on household budgets. The report highlights that BNPL users are typically younger, earlier in their financial journeys, and more likely to have limited credit histories.
However, the research also challenges the perception that BNPL primarily attracts higher-risk borrowers. TransUnion found little evidence that BNPL users perform worse than traditional credit consumers. Instead, BNPL appears to act as an entry point into the broader credit ecosystem, helping consumers build repayment histories through smaller transactions before progressing to more traditional credit products.
The report calls for a collaborative approach by regulators, lenders, BNPL providers, and credit bureaus to avoid unintended consequences for financial inclusion and credit access. “BNPL represents more than a trend — it’s a structural shift,” the report said. “The real challenge lies not in the product itself, but in how the system responds to it.”
