Buy now, pay later (BNPL) services have rapidly gained popularity in Thailand, riding the wave of e-commerce growth and the attraction of flexible payment options allowing consumers to make purchases immediately and settle payments gradually through installments.
While BNPL services help promote financial inclusion and boost sales for retailers, they also pose significant risks to consumers and the financial system. A key concern is the potential misuse for informal lending or by lending sharks, which could worsen household debt and lead to higher default rates.
Additionally, BNPL can encourage impulsive buying and overspending, trapping consumers in cycles of debt. Missed payments may result in extra fees and harm credit scores, and the increasing number of defaults has raised worries about fraud and consumer protection.
As a result, Thai regulators have issued warnings and are advocating for stricter risk management measures and regulatory safeguards to mitigate these risks associated with BNPL services.
The National Economic and Social Development Council (NESDC), the country’s planning agency, recently expressed concern about the rising trend of BNPL utilization, especially on online platforms. The practice has extended to cover expenses for food and fuel, which may lead households to accumulate excessive debt.
Danucha Pichayanan, the NESDC secretary-general, cautioned that requiring payments for essentials like food or fuel in installments signals a crisis, suggesting that government intervention is necessary to tackle the issue.
He emphasized that such vital expenses should be paid in full and not through installments. He warned that the expansion of BNPL practices could further deepen the country’s household debt problem.