Reply to Parliamentary Question on "Buy Now Pay Later" Schemes
1. “Buy Now Pay Later”, or BNPL, transactions have constituted a very small fraction of total consumer payments to date. Last year, BNPL transactions amounted to around $440 million, which is less than 0.5% of the $103 billion in credit and debit card payments.
2. BNPL schemes offered in Singapore currently do not pose significant risks of consumer indebtedness. Some common features of BNPL schemes limit the extent of debt accumulation by consumers. For example, BNPL providers typically suspend users from making further BNPL purchases once a payment is overdue. BNPL schemes also do not charge compounding interest on the outstanding amount, and cap the amount of late fees levied. The risk of rapid debt accumulation by consumers through BNPL schemes is hence not large.
3. All BNPL providers in Singapore have also set a minimum account opening age requirement of at least 18 years old. In fact, those who are 25 or older account for more than 85% of BNPL users here, and more than 90% of total BNPL transaction values.
4. MAS is nonetheless closely monitoring the BNPL sector as such borrowings have the potential to grow rapidly. We are studying the experience of other countries where BNPL schemes have taken off more strongly.
5. For now, MAS has assessed that effective industry self-regulation, through an industry code, should adequately mitigate the risks in the BNPL sector. Under MAS’ guidance, the Singapore FinTech Association has launched a BNPL Working Group to develop a code of conduct for all BNPL providers. The code, which we expect will be launched in the second half of this year, will seek to mitigate the risk of consumer over-indebtedness, and establish minimum safeguards to ensure that consumer interests are well-protected when using BNPL schemes.
6. MAS will continue to guide the progress of the BNPL Working Group and monitor developments in this space.