New guidelines are being developed to protect the interests of consumers in Singapore, where buy now, pay later (BNPL) services are seeing growing demand. These guidelines are intended to prevent the risk of “excessive debt” as more and more retailers offer such payment options through their online platforms.
With a goal of being ready by the second half of 2022, the guidelines aim to ensure BNPL will have a “positive impact” on Singaporean consumers, the Singapore Fintech Association (SFA) said in a statement on Monday. The industry group added that it has formed a working group to develop the BNPL framework.
This non-profit organization has 800 members, including various stakeholders from the fintech sector, including major financial institutions, e-commerce marketplaces, payment platforms, and startups. early stage.
According to the SFA, the BNPL working group includes members Grab, Atome and Hoolah and will operate under the guidance of the industry regulator, the Monetary Authority of Singapore (MAS).
The team will develop a collection of documents to provide behavioral guidelines and enforcement measures for BNPL service providers.
The association said the framework would hold SFA members to “the highest ethical and professional standards” in conduct and practice.
Specifically, the BNPL working group will develop principles to maintain fairness, transparency and inclusion. The SFA said decision-making processes must be transparent and outcomes must serve all consumers, especially those from vulnerable backgrounds.
The team will also seek to promote a fair and ethical environment to protect the interests of consumers and build user trust in BNPL services and providers.
SFA notes that Singaporean consumers have gained access to an increasing number of BNPL services in recent years, as more merchants adopt the payment method. These players include platforms like FavouriteLatitude Pay, Speedand Split, have joined SFA’s BNPL working group as partners.
The BNPL services have helped drive financial inclusion for underserved and underbanked segments, the SFA said, adding that the emergence of such payment options has increased credit enhancement for the general population.
MAS’s executive assistant director of policy, payments and financial crime, Loo Siew Yee, said: “The BNPL programs offered in Singapore today include a number of safeguards to mitigate risk. The risk posed by consumers accumulating excessive debt. The BNPL framework will be an important step forward in formalizing standards for the industry to ensure consumer rights continue to be protected.”
Atome’s regional head of compliance Leanne Lim noted that the framework should align with “risk-appropriate” principles that protect consumers’ interests, while allowing “development and innovation”. healthy and sustainable BNPL industry”.
BNPL is predicted to experience a CAGR (compound annual growth rate) of 40% in Singapore, through 2025, according to data from FSI’s Worldpay 2022 Global Payments Report released last week.
The payment method will also double its share in e-commerce transaction value in Singapore, from 4% last year to 8% in 2025. The study also shows that BNPL is an online payment method. The fastest growing route in the city-state, for which the e-commerce market is forecast to grow at a CAGR of 16%, reach $10.7 billion by 2025.
Credit and fee cards were the main online payment methods last year, accounting for 42% of total e-commerce transaction value. Digital wallets drove 29% of transactions, while bank transfers accounted for 12%.
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