As expected, the Consumer Credit Bill 2025 was finally passed by the House of Representatives of the Malaysian Parliament on 21 July 2025. While the Consumer Credit Act 2025 has yet to be enforced in Malaysia, given its current status, it is only a matter of time before it is officially enforced, and based on market sentiment and prevailing expectations, enforcement is certainly anticipated in the near future, bringing an end to the “wild-wild west” era of the fintech and consumer credit sector, which has seen unprecedented growth over the past few years.
With the passing of the Consumer Credit Bill 2025, one of the most significant and fast-growing business segments that will be directly impacted is, without doubt, the Buy Now Pay Later (“BNPL”) industry.
BNPL is, if not the hottest, certainly one of the fastest-growing fintech segments in Malaysia that is projected to expand by 15.1% annually to reach USD 2.52 billion in 2025, and such growth is eye-catching not only because of the increasing market share but also due to the emergence of some highly aggressive, and in some cases, arguably excessive BNPL terms in the market that is largely a result of the absence of fintech credit regulation.
The full enforcement of the Consumer Credit Bill 2025 is expected to introduce much-needed regulation and guardrails for the industry. Therefore, in this article, we aim to highlight the top 5 key takeaways for BNPL business operators to anticipate, interpret, and prepare for the coming into force of the Consumer Credit Act 2025 for compliance readiness while adapting to its upcoming implementation.
Key Takeaway 1: Understanding the Definition of BNPL Under the Consumer Credit Bill 2025
The first key takeaway is to understand what constitutes a BNPL scheme as defined under the Consumer Credit Bill 2025, as there has always been confusion regarding the actual mechanism of a BNPL scheme and which transactions fall within its scope.
According to the Consumer Credit Bill 2025, a BNPL scheme refers to “an arrangement, by whatever name called, entered into between a credit consumer and a third-party credit provider for the purchase of goods or services by the credit consumer from a seller where: (i) the third-party credit provider provides credit to the credit consumer; and (ii) the payment due by the credit consumer to the third-party credit provider is deferred and may be made in a single payment or by instalments in accordance with the terms and conditions of the arrangement.”
One key thing to note is that the BNPL arrangement must involve a credit consumer and a ‘third-party credit provider’, and this means that if credit is provided directly by the seller, rather than through a third-party credit provider, it does not fall within the definition of a BNPL scheme. This is crucial because some organizations, which act as both the seller and the credit provider, may refer to their arrangements as BNPL, but under the Consumer Credit Bill 2025, such arrangements would technically not be classified as BNPL schemes. This clarification is essential, particularly in the fintech space, where the provision of credit is often intertwined with sales.
Key Takeaway 2: Mandatory Licensing Requirements for BNPL Businesses
The second key takeaway is that under the Consumer Credit Bill 2025, a mandatory licensing requirement will now be in place for organizations carrying out BNPL businesses, meaning that no organization can carry out or hold itself out as offering BNPL services unless it is a licensed credit provider.
It is important to note that the failure to comply with this requirement could result in severe penalties, including a fine of up to RM5,000,000, imprisonment for up to five years, or both. The consequences of providing BNPL scheme without licenses are extremely severe, signaling that the Consumer Credit Bill 2025 aims to prohibit organizations from offering BNPL services unless they are licensed credit providers.
With the increasing presence of fintech startups providing micro-financing in the form of BNPL schemes, this shift means that once the Consumer Credit Act 2025 officially comes into force, such organizations must be licensed to operate legally. Therefore, all BNPL service providers should closely monitor the development of the law and ensure they are prepared to meet the licensing requirements.
Key Takeaway 3: Navigating the Structured Licensing Process
The third key takeaway is that to legally conduct BNPL business, organizations must submit a licensing application to the Consumer Credit Commission.
It is important to note that the application process with the Consumer Credit Commission is not a simple or straightforward procedure, as the Consumer Credit Commission requires that all applications be submitted in accordance with the manner prescribed by the Commission, including the payment of prescribed fees and submission of all required documents and information.
The Consumer Credit Commission may also conduct an inquiry and request additional information or documents as deemed necessary. If the applicant fails to provide the requested documentation, the application process cannot proceed, and the fees paid will not be refunded. Given the seriousness of the process, organizations should ensure they are fully prepared and cannot afford to take the application process lightly.
Key Takeaway 4: Minimum Financial Requirements
The fourth key takeaway is that in order to be successfully licensed to operate a BNPL business, there are minimum financial requirements that must be satisfied by the BNPL providers.
More importantly, even upon obtaining the licence, the organization must at all times continue to comply with these minimum financial requirements in order to carry out BNPL business, unless it has received prior written consent to deviate from such minimum financial requirements. This requirement will inevitably impose a certain degree of financial burden on BNPL providers, both at the licensing stage and on an ongoing basis, to ensure continuous compliance. This may be especially challenging for fintech startups with a relatively short runway or limited financial resources.
With that being said, it is important to appreciate that the imposition of minimum financial requirements is intentional, and we would even argue essential, to safeguard and ensure the stability of the entire credit ecosystem as they help ensure that only players with sufficient financial resilience are permitted to operate in the space, thereby protecting consumers and strengthening confidence in the market.
Key Takeaway 5: Fit and Proper Requirements
The fifth takeaway is that, in addition to minimum financial requirements, BNPL operators must also comply with “fit and proper” requirements. These fit and proper requirements extend to its directors, partners and senior management of the organization, and the fit and proper criteria include key attributes such as personal integrity, reputation, competency, capability, and financial soundness.
In fact, the Consumer Credit Bill 2025 expressly provides that the director, partner or senior management must at all times comply with these fit and proper requirements. Where any director, partner or member of senior management fails to satisfy these requirements, the organisation is obligated to remove them from office immediately. Failing to do so constitutes an offence, and upon conviction, may result in a fine of up to RM500,000 or imprisonment for up to three years, or both.
This clearly signals that individuals running BNPL businesses must meet a high standard of accountability and integrity. While BNPL companies may not be financial institutions per se, the increasing reliance of consumers on BNPL services justifies the need for such standards. It is also noteworthy that the appointment of a CEO is subject to the prior written approval of the Consumer Credit Commission, thereby underscoring the need for all stakeholders and senior management involved in BNPL businesses to be serious, competent, and compliant.
Conclusion
The passing of the Consumer Credit Bill 2025 is undoubtedly a game changer in Malaysia, not only for BNPL business providers but for the entire consumer credit and broader fintech industry.
While the introduction and implementation of the Consumer Credit Act 2025 will inevitably require significant compliance efforts from the industry players, it will also bring the much-needed clarity and legal certainty that the market has long awaited. Therefore, all business operators within this space should really closely monitor further legal developments and proactively prepare their legal operations, policies, and frameworks to ensure timely compliance once the Consumer Credit Act 2025 comes into force.
The Technology Practice Group at Halim Hong & Quek frequently advises and represents companies in relation to financial technology or FinTech matters, including BNPL scheme, factoring service and earned wage access that utilise technology in their offerings. If you are interested to know more about the Consumer Credit Bill 2025 or if you need any legal assistance with regard to your FinTech business, please do not hesitate to reach out to the Technology Practice Group.
Halim Hong & Quek has been awarded Fintech Law Firm of the Year in 2024 and 2025, and ranked as Tier 3 in Fintech and financial services regulatory by Legal 500, Band 2 in Fintech by Chambers and Partners.
About the authors
Ong Johnson
Partner
Head of Technology Practice Group
Technology, Media & Telecommunications (“TMT”),
Fintech, TMT Disputes, TMT Competition, Regulatory
and Compliance
johnson.ong@hhq.com.my
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Lo Khai Yi
Partner
Co-Head of Technology Practice Group
Technology, Media & Telecommunications (“TMT”), Technology
Acquisition and Outsourcing, Telecommunication Licensing and
Acquisition, Cybersecurity
ky.lo@hhq.com.my.
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