Introduction

Buy Now, Pay Later (BNPL) services have surged in popularity across Malaysia, offering users the convenience of purchasing items immediately and paying in installments. One such service, GrabPay Later, has gained significant traction. However, many Malaysians are finding themselves trapped in a cycle of high-interest repayments, with effective interest rates reaching as high as 300% annually.

This article explores how GrabPay Later works, the hidden costs behind these short-term loans, and how Malaysians can protect themselves from falling into debt traps.

What is GrabPay Later?

GrabPay Later is a BNPL service provided by Grab, allowing users to delay payments for services such as Grab rides, GrabFood orders, and purchases at participating merchants. It offers two primary options:

1. Pay Later (Postpaid): Users make all purchases in a month and settle them in full at the end of the billing cycle.
2. Pay Later (Installments): Users can split payments into four equal installments over time.

While these options seem appealing, many users are unaware of the high fees and penalties that come with late or missed payments.

The Hidden Costs Behind GrabPay Later

1. High Late Payment Fees

If a user fails to make a payment on time, Grab imposes hefty late fees. According to Grab’s official terms:

"A late fee of RM10 per missed payment will be charged, and repeated failures may lead to account suspension."

While RM10 may seem small, it adds up quickly when multiple payments are overdue. Worse, the penalties can push effective interest rates to predatory levels.

2. High Effective Interest Rates (300% or More)

Unlike traditional bank loans, GrabPay Later does not explicitly charge interest. However, when late fees and service charges are factored in, the annual percentage rate (APR) can exceed 300%, far surpassing personal loan rates from traditional banks (which typically range from 5% to 18%).

For example, let’s consider a GrabPay Later user who misses two payments of RM50 each:

• Missed Payment Fee: RM10 per missed payment
• Total Fees Paid: RM20
• Effective Interest Rate (APR) on RM100 loan for one month: 240%

The more payments a user misses, the higher the effective interest rate, turning GrabPay Later into a dangerous financial trap.

3. Automatic Deduction and Debt Collection

Grab automatically deducts overdue payments from the user’s GrabPay Wallet or linked bank account. If there are insufficient funds, the account may be frozen or restricted from making further transactions. Additionally, Grab can escalate the issue to debt collection agencies, affecting the user’s credit score and financial standing.

The Psychological Trap of BNPL Services

Many Malaysians fall into the BNPL trap because of psychological biases:

• Illusion of Affordability: Users perceive small installments as more manageable, leading them to spend beyond their means.
• Overconfidence Bias: People assume they will pay on time but underestimate their future expenses.
• Lack of Awareness: Many users do not read the fine print or understand the financial implications of late fees.

How to Protect Yourself from BNPL Debt

1. Understand the True Cost of BNPL Loans

Before using GrabPay Later, calculate the total cost of repayment, including potential late fees. If the total exceeds a regular credit card or personal loan interest rate, reconsider using the service.

2. Set Reminders for Payment Deadlines

To avoid unnecessary penalties, set automatic reminders for due dates or enable auto-payment from a linked bank account.

3. Limit BNPL Usage to Necessities

Avoid using GrabPay Later for non-essential spending. If possible, use it only for small, manageable amounts that you can pay off comfortably.

4. Build an Emergency Fund

Many users turn to BNPL services due to cash flow issues. By maintaining an emergency savings fund, you can reduce reliance on high-cost credit options like GrabPay Later.

Image credit: https://blogeromnet.com/grabpay/?ckattempt=1

Should the Malaysian Government Regulate BNPL Services?

Unlike credit cards, which are strictly regulated by Bank Negara Malaysia (BNM), BNPL services like GrabPay Later currently operate with fewer restrictions.

Many financial experts argue that:

• BNPL providers should be required to disclose the effective interest rates of their services.
• Late payment fees should be capped to prevent excessive charges.
• Users should have stronger consumer protections to avoid falling into debt traps.

Other Countries' Regulations:

• Singapore has introduced a BNPL Code of Conduct that limits late fees.
• Australia is moving towards regulating BNPL services under the same laws as credit providers.

If Malaysia follows suit, it could help protect consumers from exploitative financial practices.

Conclusion: Is GrabPay Later Worth It?

While GrabPay Later can be a convenient payment option, it carries hidden financial risks that users must be aware of. The combination of high late fees, automatic deductions, and lack of transparency on effective interest rates makes it a potential debt trap.

Before using GrabPay Later, ask yourself:

✅ Can I afford the repayments without delay?
✅ Do I understand the penalty fees and interest rates?
✅ Is there a better alternative (e.g., a low-interest credit card or savings)?

If the answer to any of these is no, then it may be wiser to avoid BNPL services and choose more transparent financial options.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult a financial advisor before making any financial decisions. The information provided is based on publicly available data and may be subject to changes by Grab or relevant authorities.