Date: For Parliament Sitting on 28 February 2025

Name and Constituency of Member of Parliament

Mr Yip Hon Weng, MP, Yio Chu Kang SMC

Question

To ask the Prime Minister and Minister for Finance with regard to the rising use of Buy Now, Pay Later (BNPL) schemes among young consumers (a) what regulations govern BNPL schemes to address the potential risks associated with easy access to large purchases; (b) how is appropriate credit assessment of young users ensured before approving their use of such platforms; (c) whether their outstanding BNPL payments are factored into total debt servicing ratio calculations; and (d) how are youths educated on responsible BNPL usage and financial prudence.

Answer by Mr Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, and Board member of MAS, on behalf of Mr Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of MAS:

1. “Buy Now, Pay Later” (BNPL) transactions remain small compared to other means of consumer payment, accounting for about 1% of the value of total credit card and debit card payments in the first half of 2024. 

2. While MAS does not currently regulate BNPL firms, those operating in Singapore have committed to the BNPL Code of Conduct that was developed under MAS’ guidance to mitigate the risk of debt accumulation and protect user interests. MAS provided details on safeguards in the BNPL Code in our past replies to Parliamentary Questions in November 2022 and more recently, February this year.

3. Under the BNPL Code, accredited firms can only offer BNPL services to customers aged 18 and above and are not allowed to extend more than $2,000 in credit to a customer unless they conduct an additional credit assessment. The credit assessment includes conducting income checks and credit checks against the BNPL credit bureau, which includes information on BNPL users’ outstanding balances, missed payments and delinquencies amongst accredited firms.  

4. The Total Debt Servicing Ratio, or TDSR, includes monthly debt obligations from all credit facilities granted by financial institutions regulated by MAS. These account for 98% of all credit granted to Singapore households by commercial entities. MAS does not require financial institutions to include outstanding BNPL amounts when computing the TDSR requirements, recognising that BNPL outstanding amounts tend to be relatively small with safeguards to prevent debt snowballing. 

5. MoneySense, our national financial education programme, shares content on the importance of money management and financial budgeting on its website and social media channels. These include advising consumers to beware of spending beyond their means while using BNPL schemes and other instalment plans. The national school curriculum from primary up to tertiary level has incorporated key financial concepts, such as the effects of compound interest and the responsible use of credit. The efforts are complemented by talks and exhibitions organised for youths by MoneySense. 

6. MAS continues to monitor developments in the BNPL sector and will review its regulatory framework as appropriate.

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