David Precious | Senior Market Analyst | EBC Financial Group | mail me |
South Africa should carefully assess how short-term instalment products are interpreted before Buy Now, Pay Later (BNPL) data shapes access to mainstream credit.
The country could risk turning BNPL into a product that shuts people out of mainstream credit rather than helping them into it. This could happen if BNPL data enters credit-scoring systems that were never designed to interpret this type of product fairly.
BNPL allows shoppers to split a purchase into smaller payments over a short period. These payments can occur without interest. The product has become widely used across South Africa. This is particularly true among younger and lower-income consumers who may not yet qualify for a credit card or personal loan. However, BNPL could trigger credit exclusion if scoring systems misinterpret how these products work.
Millions of South Africans could be affected
Credit bureau TransUnion warned that between 15% and 25% of South Africans currently hold a credit product. The products may include a loan, store card or mortgage, could see their credit score drop. This could happen if BNPL accounts enter existing scoring systems without adjustments.
Applied to the National Credit Regulator (NCR)’s base of 29.24 million South Africans with an active credit product as of June 2025, that range implies that roughly 4.4 million to 7.3 million people could be affected. This means that a shopper who pays every BNPL instalment on time could still see their credit score fall. This could happen simply because the system was not built to understand this type of product.
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 blind spots.
If a consumer pays every BNPL instalment on time, they 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.
The warning highlights a broader concern. BNPL could trigger credit exclusion for consumers who have demonstrated responsible repayment behaviour.
How BNPL could penalise first-time and lower-income borrowers
BNPL has been promoted as a way for people with little or no credit history to start building one. However, that promise may unravel if using BNPL makes it harder for those same people to access a home loan, vehicle finance or personal loan in the future.
TransUnion found that about 17% of BNPL users are new-to-credit consumers. This means they have no prior credit record. Nearly 20% are people with some credit history but limited access to mainstream bank lending. The company also found no evidence that BNPL users are inherently riskier borrowers than anyone else.
Understanding risk scoring helps explain 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. It also carries a balance from one month to the next and reuses the credit as they repay it.
BNPL works differently. It is tied to a single purchase. It has a fixed amount and repayment schedule, and it closes once the instalments are complete. Existing credit-scoring systems were built around products such as credit cards. When these systems encounter BNPL data, they may treat it like credit card debt. Consequently, a responsible BNPL user may appear more financially stretched than they actually are.
Why scoring models could misread BNPL data
Credit-scoring systems also examine how much of a person’s available credit they are already using. With BNPL, that number may appear higher than it actually is. This happens because the system was not designed to interpret short-term instalment products in the same way as ongoing credit products such as credit cards.
A consumer who pays every BNPL instalment on time may still appear, on paper, as though they are borrowing more than they can handle.
For a first-time credit user who buys a household appliance through a BNPL provider, or for a young professional who uses an instalment option at a major retailer, the issue is not abstract. If that consumer’s credit score sits close to the level that a lender uses to approve or decline an application, even a modest score drop caused by BNPL data could create a real outcome.
Vehicle finance may be priced at a higher interest rate. A home-loan application may require additional documentation, or a lender may decline it outright. A lender may reduce a retail account limit, or it may send a personal loan for manual review instead of approving it.
In each of these scenarios, BNPL could trigger credit exclusion and prevent responsible borrowers from accessing financial opportunities.
Active credit products make 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 increasingly relevant within South Africa’s credit ecosystem. It may influence access to credit, affordability assessments, lender approvals, score interpretation and the future shape of financial inclusion.
The same report says BNPL users are younger and earlier in their financial journey. They are concentrated in lower-to-middle income bands and often participate less in formal credit markets. Around 17% are classified as new-to-credit, while a further 20% are classified as underserved. South African BNPL providers include Payflex, PayJustNow, MoreTyme and Happy Pay.
Based on this level of market penetration, any flaw in how scoring systems interpret BNPL data may no longer represent a niche issue affecting early adopters. Instead, it could affect millions of borrowers. This includes the lower-income and thin-file consumers that 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. Meanwhile, 35% expected that they would be unable to pay at least one bill or loan in full during the quarter.
For consumers who are already financially stretched, a credit score drop caused by the system’s interpretation of BNPL data, rather than their actual repayment behaviour, could cut off access to credit that they genuinely need. In this way, BNPL could trigger credit exclusion for consumers who have otherwise managed their finances responsibly.
What the NCR’s decision could mean for borrowers
South Africa’s credit regulator has already recognised the risk. The NCR has issued a formal instruction to stop BNPL data from entering live credit-scoring systems until further assessment is completed.
The Fintech Association of South Africa (FINASA) confirmed that BNPL providers are submitting data for testing in the meantime. The NCR may also establish a Steering Committee to determine 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 merely delays the same problem.
There is also a separate deadline approaching that could affect how much time South Africa has to address this issue. The Conduct of Financial Institutions Bill (COFI Bill), which could establish rules for how BNPL providers are supervised, 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 appears. If this timeline holds, South Africa will have limited time to ensure that BNPL data is interpreted correctly before it influences lending decisions.
In conclusion
More data should improve credit decisions, not distort them. The immediate question is what lenders do in the interim. South Africa needs to fix how BNPL is labelled in the system. It also needs to test how scoring models respond to BNPL 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 specifically designed for how BNPL works, the more data could accumulate inside scoring systems that were not built for it. Consequently, it may become increasingly difficult to separate a system’s reaction from a borrower’s actual behaviour.
Whether the current pause becomes a genuine solution or simply a delay may depend on how quickly the committee moves.
Getting this answer right is not only a regulatory task. It could determine whether South Africa creates a credit system that opens doors for more people. Alternatively, it could create a system in which BNPL could trigger credit exclusion. This could also quietly close those doors on the very consumers it was designed to help.
