An increasing number of South Africans are turning to “Buy Now, Pay Later” (BNPL) platforms, which allow consumers to make purchases immediately and settle payments at a later date. While the system may appear convenient, financial experts are raising red flags about its long-term impact on debt and credit health.
Speaking to VOC News, Reinhard Pettenburger-Perwald, owner of Debt Therapy and president of the Debt Counselling Association of South Africa (DCASA), warned that the industry currently lacks regulation.
“One of the biggest problems is that it’s unregulated. No real checks are done, so you can actually put people into very bad financial situations where they’ll be over-indebted, and in the long term, it can cause a lot of trouble,” he explained.
Pettenburger-Perwald noted that some BNPL providers give consumers access to up to R30,000 within minutes, often without thorough credit checks. While purchases may be interest-free if paid on time, late payments can attract hefty penalties.
“Some of these companies have already capped late fees at R255, but it is still very worrying,” he said.
He added that the convenience of BNPL can easily spiral out of control:
“You buy one item, then another, and suddenly you’ve got a whole lot of credit outstanding that needs to be repaid very quickly. As soon as you miss any of those payments, that’s when a lot of problems hit you – lawyers knocking on your door, information added to your credit report, and in effect, you will be over-indebted.”
While BNPL may offer short-term relief for families struggling with rising expenses, Pettenburger-Perwald believes stronger oversight is crucial.
“Although it sounds great, I’d be very sceptical about making use of these platforms without regulation,” he cautioned.
Listen to the full interview below:
VOC News
Photo: Pixbay
