EBC Financial Group says South Africa should carefully assess short-term instalment products are interpreted accurately before BNPL data shapes access to mainstream credit.
South Africa could risk turning buy now, pay later (BNPL) into a product that shuts people out of mainstream credit, rather than helping them into it, if BNPL data enters credit-scoring systems that were never designed to read this type of product fairly. BNPL allows shoppers to split a purchase into smaller payments over a short period, they can happen without interest, and has become widely used across South Africa, particularly among younger and lower-income consumers who may not yet qualify for a credit card or personal loan.
Credit bureau TransUnion warned that between 15% and 25% of South Africans who currently hold a credit product, such as a loan, store card or mortgage, could see their credit score drop if BNPL accounts are fed into existing scoring systems without any adjustment for how differently the product works. Applied to the National Credit Regulator (NCR) base of 29.24 million South Africans with an active credit product as of June 2025, that range implies roughly 4.4 million to 7.3 million people could be affected. That means a shopper who pays every BNPL instalment on time could still see their credit score fall, simply because the system was not built to understand this type of product.
David Precious, Senior Market Analyst at EBC Financial Group, said, “Overborrowing may potentially become the next consumer credit risk, but it is not the only factor. A thorough examination of the data would uncover other factors in play. It could even uncover blindspots. If a consumer pays every BNPL instalment on time can appear riskier because the model was built for a completely different product category. This suggests a market-confidence issue for lenders, retailers and households.”
How Buy Now, Pay Later could Penalise First-Time and Lower-Income Borrowers who are Repaying Responsibly
BNPL has been promoted as a way for people with little or no credit history to start building one. But that promise may unravel if the act of using BNPL ends up making it harder for those same people to access a home loan, car financing, or personal loan in the future. TransUnion found that about 17% of BNPL users are new-to-credit consumers, meaning they have no prior credit record, and nearly 20% are people with some credit history but limited access to mainstream bank lending. TransUnion also found no evidence that BNPL users are inherently riskier borrowers than anyone else.
Scoring risk helps to determine how BNPL differs from a credit card. A credit card is an open-ended product where a consumer can spend up to a set limit, carry a balance from one month to the next, and reuse the credit as they repay it. BNPL works differently: it is tied to a single purchase, fixed in how much is repaid and when, and closes once the instalments are done. Existing credit-scoring systems were built around products like credit cards. When those systems encounter BNPL data, they may treat it like a credit card debt, which could make a responsible BNPL user appear more financially stretched than they actually are.
Credit-scoring systems also look at how much of a person’s available credit they are already using. With BNPL, that number may appear higher than it actually is, because the system was not designed to read short-term instalment products the way it reads an ongoing credit product like a credit card. A consumer paying every BNPL instalment on time may still look, on paper, as though they are borrowing more than they can handle.
For a first-time credit user buying a household appliance through a BNPL provider, or a young professional using an instalment option at a major retailer, the issue is not abstract. If that consumer’s credit score sits close to the level a lender uses to decide whether to approve or decline an application, even a modest score drop caused by BNPL data could produce a real outcome: a vehicle finance application may be priced at a higher interest rate, a home-loan application may require additional documentation or be declined outright, a retail account limit may be cut, or a personal loan may be sent for manual review rather than approved.
Why 71% BNPL Uptake Among South Africans with Active Credit Products Makes Scoring Accuracy a Risk for the Whole System
South Africa’s BNPL market has grown too important to be treated as a niche checkout issue. TransUnion’s BNPL Whitepaper says BNPL is becoming relevant within South Africa’s credit ecosystem and may influence access to credit, affordability assessment, lender approvals, score interpretation and the future shape of financial inclusion. The same report says BNPL users are younger, earlier in their financial journey, concentrated in lower-to-middle income bands and often lighter in their participation in formal credit, with around 17% classified as new-to-credit and a further 20% classified as underserved. South African BNPL providers include Payflex, PayJustNow, MoreTyme and Happy Pay. Based on that level of market penetration, any flaw in how BNPL data is read by scoring systems may no longer be a niche issue affecting early adopters. It could affect millions of borrowers, including the lower-income and thinner-file consumers the product was designed to help.
Household finances are also under pressure at exactly the wrong time. The TransUnion Q1 2026 Consumer Pulse Study found that 41% of South Africans cited the rising cost of everyday goods as their top financial concern, while 35% expected to be unable to pay at least one bill or loan in full during the quarter. For consumers already stretched, a credit score drop caused by how a system reads their BNPL data, rather than how they actually repay, could cut off access to credit they genuinely need at a time when they can least afford it.
What the NCR’s Decision to Pause Live BNPL Data Processing Could Mean for Borrowers, Lenders and a New Law Moving Through Parliament
South Africa’s credit regulator has already recognised the risk. The NCR, the government body that oversees how credit is granted and reported in South Africa, has issued a formal instruction to stop BNPL data from being fed into live credit-scoring systems until further assessment is completed. The industry body representing South Africa’s financial technology providers, the Fintech Association of South Africa (FINASA), confirmed that BNPL providers are submitting data for testing in the meantime. The NCR may also form a Steering Committee to work out what the final reporting rules should look like. How quickly that committee moves may determine whether the current pause results in a properly calibrated system or simply delays the same problem.
There is also a separate deadline approaching that could affect how much time South Africa has to get this right. A new law that could set the rules for how BNPL providers are supervised, the Conduct of Financial Institutions (COFI) Bill, was introduced in Parliament in April 2026. If the legislative process advances during 2026, the window for getting BNPL scoring rules right before lenders start acting on the data may be shorter than it currently looks. If that timeline holds, the window for getting BNPL scoring and reporting rules right before lenders start acting on the data may be shorter than it currently looks.
“More data should improve credit decisions, not distort them,” Precious added. “The immediate question is what lenders do in the interim. South Africa needs to fix how BNPL is labelled in the system, test how scoring models respond to it across different types of borrowers, and tell consumers what is happening to their score, before any of this goes live.”
The longer South Africa takes to establish rules designed specifically for how BNPL works, the more data could accumulate inside scoring systems that were not built for it, and the harder it may become to separate a system’s reaction from a borrower’s actual behaviour. Whether the current pause becomes a genuine fix or simply a delay may depend on how fast that committee moves. Getting that answer right is not only a regulatory task. It could be the difference between a credit system that opens doors for more South Africans and one that quietly closes them on the very people it was designed to help.
About EBC Financial Group
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Source: EBC Financial Group.