Response to Commentary "Time for Singapore to regulate buy now, pay later schemes" – The Business Times, 6 June 2023
We thank Mr Benjamin Cher for his commentary, “Time for Singapore to regulate buy now, pay later schemes” (The Business Times, 6 June 2023). Mr Cher suggested that buy now, pay later (BNPL) schemes should be regulated much the same as other credit products in Singapore.
2. The Monetary Authority of Singapore (MAS) shares Mr Cher’s concern that BNPL schemes could lead to excessive consumer borrowing. This is why we have worked with the BNPL industry to codify a set of explicit requirements to safeguard consumers against such risks. These requirements are consistent with the objective of our regulations for unsecured credit products.
3. Relying on an industry-led Code that is consistent with MAS’ expectations is a good way to foster compliance. A more prescriptive regulatory approach would unduly constrain BNPL providers and limit consumer choices and would not be commensurate with the risks posed by such schemes, given that the total value of BNPL transactions is only 1% of total debit and credit card payments for 2022. If offered responsibly with the safeguards set out in the Code, BNPL schemes will allow consumers to manage their spending without excessive risk of indebtedness.
4. An assessor that is independent from both the Oversight Committee and BNPL providers will assess and verify BNPL providers’ implementation of the Code. Firms that are assessed to be compliant with the Code will be distinguished through a standardised accreditation trustmark and listed in a BNPL Registry. The trustmark will allow consumers to identify BNPL providers that have implemented the safeguards.
5. Breaching the BNPL Code is not without consequences. Such a BNPL provider will lose its accreditation and suffer reputational damage. MAS will be informed should breaches of the Code result in a BNPL provider losing its trustmark.
6. MAS will closely monitor compliance against the Code. We will consider stronger regulation if necessary.
Dawn Chew Director (Corporate Communications) Monetary Authority of Singapore