MicroFinance SA (MFSA) has called for urgent regulatory oversight of the fast-growing “buy now, pay later” (BNPL) sector, warning that unchecked expansion could drive hidden consumer indebtedness and strain households.
BNPL products, marketed as interest-free and accessible, have surged in popularity through platforms such as Payflex and PayJustNow, which dominate the local market, according to global data and business intelligence platform Statista.
But MFSA, which represents microfinance credit providers, says these products fall into a regulatory grey area that leaves gaps in affordability checks, transparency and credit bureau reporting.
“BNPL has a place in SA’s financial ecosystem, but like any form of credit it must be transparent, responsible and sustainable,” said MFSA CEO Leonie van Pletzen.
The group, which advocates for ethical lending and consumer protection, is pushing for BNPL to be brought under the National Credit Act (NCA) and wants providers and regulators to draft an industry code.
“We are not calling for restrictions that stifle innovation. Instead, we are inviting BNPL providers and regulators to work with us on an industry code that balances innovation with responsibility,” Van Pletzen said.
According to TransUnion’s Consumer Pulse Study for the fourth quarter of 2024, 74% of South Africans are aware of BNPL and half of respondents said they had used the service more than once in the past year. About 13% said they used BNPL to avoid paying credit card interest, while 12% used it to spread payments. Younger consumers, particularly millennials and Gen Z, are driving use of the instalment facility, drawn to its digital simplicity and easy checkout.
TransUnion said retailers have long offered instalment plans for high-ticket items, but e-commerce has supercharged adoption of the facility. “The growth of BNPL has been fuelled by the increasing demand for flexible, accessible credit,” TransUnion Africa said.
Launched in 2019, Payflex, now owned by FeverTree Finance, is the largest BNPL operator in the country, with a reported 60% market share. It has grown rapidly, reporting a 10-fold increase in sales volumes in the two years to 2023.
Rival PayJustNow, owned by Weaver Fintech, has also expanded aggressively, reaching 2.6-million customers, R7.5bn in transactions and nearly 3,000 merchants by early 2025.
Other players include Mobicred, TymeBank’s MoreTyme, Float and Happy Pay.
Legal experts at Webber Wentzel have said BNPL products often fall outside the NCA because they don’t charge interest and operate on short repayment cycles. That allows operators to avoid registering with the National Credit Regulator (NCR) and conducting formal affordability assessments. The Financial Sector Conduct Authority (FSCA) also has limited jurisdiction, leaving what analysts describe as a “regulatory void”.
Regulators in the UK, US and Australia have already moved to tighten BNPL rules after rising defaults and consumer stress. Webber Wentzel partners Lerato Lamola and Anél De Meyer said SA’s pending Conduct of Financial Institutions Bill could help by clarifying oversight and extending consumer protection.
Weaver Fintech CEO Sean Wibberley said the company supports measures that improve transparency and it already reports BNPL transactions to credit bureaus. However, he warned against cumbersome regulations that could undermine financial inclusion, saying PayJustNow’s average limit is just R2,500 and its default rate is below 2%.
Nonetheless, MFSA said collaboration is the way forward. “This is our chance to set clear standards before challenges escalate, and to show that SA can lead with proactive, consumer-centred solutions.”
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