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IOL News
a day ago
- Business
- IOL News
Unregulated Buy Now, Pay Later services could push millions of SA consumers into financial ruin
Buy Now, Pay Later is presented as a modern, interest-free payment solution, however in reality it functions as credit. Image: Simphiwe Mbokazi/ Independent Media MicroFinance South Africa (MFSA) has warned that the unchecked rise of Buy Now, Pay Later (BNPL) credit services is exposing millions of South Africans to unsustainable debt, hidden costs, and financial exploitation, and is urging regulators to act swiftly. MFSA CEO Leonie van Pletzen said the largely unregulated system is particularly concerning for low-income workers, young consumers, and an already over-indebted population. 'Without urgent intervention, this growing shadow credit system could lead to devastating consequences,' she said. BNPL lets shoppers pay for products in instalments over a set period, often interest-free and without service fees. While promoted as a modern, convenient payment option, van Pletzen said it is 'in reality… credit that is not subject to the core protections of the National Credit Act (NCA)'. MFSA has found individuals stacking multiple BNPL products without affordability checks, credit bureau reporting, or understanding the long-term costs. As of June, BNPL's status under the NCA or the Financial Advisory and Intermediary Services Act remains unclear. The Intergovernmental Fintech Working Group has noted that BNPL currently sits in a regulatory void, with the National Credit Regulator and Financial Sector Conduct Authority each overseeing separate, unrelated laws. MFSA said BNPL is now being used for essentials such as groceries, utilities, transport, and healthcare — not just luxury purchases. 'This signals an alarming dependency on unregulated debt for basic living expenses,' said van Pletzen, warning that consumers often don't realise they are entering credit agreements due to marketing tactics and lack of formal disclosures. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ BNPL platforms can approve up to R30 000 in credit in under three minutes, with some issuing over 100 000 new accounts per month. Approval rates range from 50% to 70%, with penalty fees — capped at around R255 per late transaction — charged weekly. MFSA has called for BNPL providers to be brought under the NCA, with mandatory affordability assessments, full credit bureau reporting, standardised disclosures, licensing or registration, and access to dispute resolution through an ombudsman. 'South Africa is now at a critical crossroad,' van Pletzen said. 'Either allow BNPL to continue growing unchecked, or proactively regulate it to protect consumers and maintain the integrity of the financial system.' IOL Business
Crypto Insight
11-07-2025
- Business
- Crypto Insight
Malta's MiCA licensing comes under scrutiny from EU regulator
Malta's cryptocurrency licensing process has come under scrutiny from the European Securities and Markets Authority (ESMA), Europe's primary supervisory body overseeing the Markets in Crypto-Assets Regulation (MiCA). The ESMA on Thursday released a review of the authorization process of crypto asset service providers (CASPs) by Malta's Financial Services Authority (MFSA), highlighting several shortfalls and proposing a set of recommendations. Despite saying the MFSA met certain expectations in supervisory setup and staffing, the EU watchdog said the Maltese authorities only 'partially met expectations' in the authorization process for an unidentified CASP. Following the review, the ESMA's ad hoc Peer Review Committee (PRC) recommended that MFSA 'assess material issues that were pending at the date of the authorization or that have not been adequately considered at the authorization stage.' Malta review launched in April The report comes over a year after the MiCA framework came into force on June 29, 2024, becoming a major milestone in the EU's approach to regulating digital assets. Since MiCA is aimed at providing a unified and consistent legal framework for crypto in the EU, the regulator highlighted that MiCA's authorization approach applies to all National Competent Authorities (NCAs). In December 2024, the European Banking Authority's Board of Supervisors (BoS), the agency's main decision-making body, agreed on the adoption of a coordinated approach for CASPs authorizations. 'Following a series of events, the BoS of ESMA decided, in April 2025, to launch a peer review on the authorization and early supervision of a CASP by the Malta Financial Services Authority,' the report noted, adding: 'Although the peer review targeted one NCA, still, it aims to foster supervisory convergence and improve the supervisory practices of all NCAs, at a time when consistency across NCAs in authorization and setting supervisory expectations is key.' MFSA's authorization fell short of expectations The ESMA's PRC, the committee that conducted the peer review process into MFSA, reported that MFSA has built a 'good level of expertise in this sector and has sufficient supervisory resources for CASP authorizations and supervision.' PRC's review concerned three main areas: the supervisory settings and resources, the authorization process and the supervisory review and use of adequate powers. While fully meeting the supervisory settings requirements and largely meeting the supervisory review rules, the report said the MFSA has only 'partially met expectations' relevant to the 'authorization of the specific CASP.' Malta's MFSA 'needs to monitor closely the growth in authorization applications' and identify and adjust supervisory practices in a timely manner, the PRC said. It reiterated that all the EU state NCAs have to consider this issue and strictly follow the standards: 'Due to the novelty and nature of these type of entities as well as the inherent risks of their business model, the PRC recommends to all NCAs, currently in the process of authorising CASPs, to pay particular attention to certain aspects of the authorization.' Any impact on the licenses? Since the ESMA did not disclose the name of the CASP in question of the MFSA's authorization misstep, it's unclear whether the PRC's recommendation to assess the issue would impact any issued licenses. 'It is hard to comment without knowing exactly what the unresolved issues were,' XReg consulting partner Nathan Catania told Cointelegraph. 'I wouldn't expect any revocation or re-evaluation based on the report,' he said. Juan Ignacio Ibañez, general secretary of the MiCA Crypto Alliance, voiced a similar view, stating that the ESMA review is 'largely positive.' 'I do not see a material risk to existing licences,' Ibañez told Cointelegraph, adding that ESMA does not hold legal power over the national regulators. He also suggested that the issue is likely related to a difference of opinion in degree between ESMA and MFSA. 'MFSA seems to think that some issues can be managed via ongoing monitoring, whereas ESMA thinks MFSA should leverage the threat of licence rejection to get the issues resolved before authorisation,' Ibañez said. Four MiCA CASPs licensed by MFSA According to the MFSA register of licensed CASPs operating under MiCA, there are currently four registered companies. Those include BP23, trading as Bitpanda; Foris Dax, trading as Okcoin Europe, trading as OKX; and Zillion Bits, trading as ZBX. In April, Malta's Financial Intelligence Analysis Unit fined Okcoin Europe $1.2 million after detecting certain violations dating back to 2023. The penalty came soon after the MFSA granted a MiCA license to OKX in January 2025. Cointelegraph approached ESMA and MFSA for comment regarding the review's potential impact on the MiCA-licensed companies in Malta, but had not received a response by publication. Source:
Express Tribune
11-07-2025
- Business
- Express Tribune
EU criticises Malta over crypto regulation
One of the most encouraging signs comes from right here in Pakistan. Bilal bin Saqib, recently appointed as the Chief Advisor to the Pakistan Crypto Council, is a name to watch. photo: Reuters The European Securities and Markets Authority (ESMA) on Thursday highlighted a Maltese regulator's shortcomings over the issuance of a licence enabling cryptocurrency firms to operate across the EU. In recent years the tiny Mediterranean island has managed to attract a number of cryptocurrency investors and companies, leading to accusations of lax oversight in an industry already considered to be poorly regulated. The ESMA's criticism, contained in a final report, followed December's launch of the first European Union-wide cryptocurrency regulation. Markets in Crypto-Asset (MiCA) insists on service providers obtaining a licence to operate legally in the European Union. The EU watchdog said on Thursday that Malta's "authorisation process should have been more thorough and conducted on a sufficient time to allow (Maltese regulator) MFSA to properly assess compliance against the MiCA framework". ESMA added that it "did not find evidence that certain key aspects of the authorisation file were adequately assessed including... the on-boarding of new clients". MiCA is issued once specific criteria on anti-money laundering, prevention of terror group financing, IT security and financial soundness have been implemented. Such a framework aims to protect investors and provide credibility to the sector. MFSA defended its handling in a response sent to AFP on Thursday. "It is very important to dispel the myth that Malta has been rushing when it comes to granting licenses," it said in a statement. "To be clear, no one has been granted a license in a matter of days. Preparations for MiCA implementation have been comprehensive and commenced two years ago." It added that action had been taken "to ensure Malta retains its position as a robust yet accessible jurisdiction. "The final report recognises a lot of strengths when it comes to the regulation of digital assets in Malta and we are extremely proud of the work that has been achieved on this front to date," the statement said. Thursday's report did not name Seychelles-based crypto exchange OKX, to which MFSA issued a licence in late January. This was one month before the company paid half a billion dollars to the US Department of Justice over separate compliance failures.
Reuters
10-07-2025
- Business
- Reuters
EU regulator criticises Malta's crypto licensing process
PARIS, July 10 (Reuters) - Malta did not do enough to assess the level of risk when granting a licence to a crypto company under the EU's new regulatory regime, the bloc's financial watchdog said on Thursday following an examination of the Maltese regulator. Reuters first reported in June that the European Securities and Markets Authority (ESMA) was scrutinising Malta's crypto authorisation process, after some regulators raised concerns in closed-door meetings about the speed with which licences were being granted by some states. Under the EU's Markets in Crypto-Assets (MiCA) regulation, which came into force this year and is the world's first comprehensive set of crypto rules, companies offering crypto services must obtain a licence from a national regulator. That licence can then be "passported" to allow companies to operate in other EU member states, but the rollout has raised concerns about inconsistent approaches and whether individual regulators can effectively supervise complex cross-border financial firms. The review into Malta focused on Malta's decision to grant a licence to one particular crypto company, without specifying which. ESMA launched the review in April "following a series of events", it said, without giving further details. Malta's Financial Services Authority (MFSA) said in a statement on Thursday that it was proud of its role as an "early adopter" of digital asset regulation and did not directly address ESMA's criticisms. Malta said it has granted five crypto asset service provider licenses under MiCA since January. ESMA's review found that while MFSA had enough expertise in crypto and enough resources to authorise and supervise crypto companies under MiCA, its authorisation process only "partially" met expectations. "The overall authorisation process should have been more thorough and conducted on a sufficient time to allow MFSA to properly assess compliance against the MiCA framework," the review said. ESMA found that material issues with the crypto company were unresolved or pending remediation when the licence was granted, adding that the company's supervisory history was not "adequately considered". The review recommended that Maltese regulators pay particular attention to crypto companies' business plans, conflicts of interest, governance arrangements, IT systems and their promotion of unregulated services.
Yahoo
10-07-2025
- Business
- Yahoo
Europe's Financial Watchdog Probes Malta Over Fast-Track MiCA Authorizations
The European Securities and Markets Authority (ESMA), the financial watchdog for the 27-country trading block, has carried out a peer review of Malta's application of the Markets in Crypto Assets (MiCA) regime, with specific attention to the island's fast-tracked authorization of a certain unnamed crypto firm. ESMA's Peer Review Committee (PRC) focuses on the authorization of a specific crypto asset service provider or 'CASP entity,' which was cleared for MICA despite the fact that 'material issues remained unresolved or pending remediation at the time of the authorization.' OKX, the top five crypto exchange was granted pre-authorization status in Malta at the start of this year and soon after revealed a $500 million settlement with the U.S. Department of Justice (DoJ). OKX did not confirm if it is the CASP entity referred to in the review by press time. Malta Financial Services Authority (MFSA) said it was unable to provide official comment regarding specific operators in relation to the report. 'On the authorization process of the CASP entity, the PRC questions the timing of the authorization of the specific entity under MiCA given that several material issues remained unresolved at the time of the authorization,' said the ESMA review. 'It is unclear to the PRC, why MFSA did not leverage on the authorization process to ensure that the entity would remedy key deficiencies before the authorization would be effective. The PRC is of the view that the overall authorization process should have been more thorough and conducted on a sufficient time to allow MFSA to properly assess compliance against the MiCA framework.' Questions have been circulating about Malta's competency since the island began handing out expedited licenses, some of which, it must be said, came from players in other jurisdictions that are potentially worried about falling behind in terms of authorizing firms. The ESMA findings also stated that any regulator should consider the supervisory history of an entity when assessing a request for authorization. The PRC said, 'the supervisory history of the entity formed part of the authorization assessment, but it was not adequately considered,' including the fact that 'material issues remained unresolved or pending remediation at the time of the authorization, including the remediation of previous enforcement cases and the outcome of (at the time) pending ones.' The ESMA review went on to say that it did not find evidence that certain key aspects of the authorization were adequately assessed. These included aspects of its business plan related to its growth and the on-boarding of new clients, potential conflicts of interest, and governance arrangements. The review also mentioned risks related to the ICT infrastructure, custody, use of the […] booking model, use of Web3 services and certain AML/CFT risks and controls. The ESMA review found that Malta fully or largely met expectations in areas like its supervisory settings and resources, and it was just the authorization process where it had really fallen short. The Malta Financial Services Authority (MFSA) welcomed ESMA's findings. 'The insights provided by the ESMA Peer Review Committee (PRC) (composed of staff from ESMA, European Banking Authority (EBA) and NCAs) are invaluable in supporting the MFSA and other NCAs in their continued efforts to improve and strengthen supervision of this sector,' the MFSA said in an emailed in to access your portfolio
