The Singapore FinTech Association has adopted a Buy Now, Pay Later (BNPL) Code of Conduct (BNPL Code) designed to protect consumers and align BNPL service offerings with the needs of Singapore’s financial ecosystem. The BNPL Code, which applies from 1 November 2022, is the first component of a broader plan expected to be implemented in late 2023 that will include a bureau to share credit information, accreditation of BNPL service providers and an accreditation trust mark.

BNPL schemes have become increasingly popular among consumers, merchants and credit providers in recent years. Consumers enjoy the flexibility to defer payments and to pay in instalments. Merchants capture more sales by offering different payment options to their customers. BNPL providers earn additional revenue from a new product line. But as always when consumers have ready access to credit, some consumers buy more than they can afford, some merchants impose excessive or unfair fees and scammers seek to take advantage of the unwary.

The BNPL Code establishes the following standards:

• Credit Safeguards. Consumers will be limited toS$2,000 of outstanding payments unless they successfully complete an additional credit assessment.‍
• Fair and Transparent Fees and Terms. Fees will be capped and interest will not be compounded. Full repayment can be made at any time without repayment fees. Fees will be communicated clearly and transparently. Consumers will have access to account statements consolidating amounts owed to each BNPL provider.‍
• Ethical Marketing. BNPL providers will adhere to relevant advertising codes and will in any case ensure their marketing materials are clear and not misleading or deceptive.‍
• Voluntary Exclusion. BNPL providers will honour requests from consumers to exclude them from BNPL services and promotions.‍
• Financial Hardship Assistance. In appropriate circumstances, BNPL providers will assess requests to defer, reduce or waive fees and charges and develop a mutually acceptable repayment schedule.‍
• Dispute Resolution. BNPL providers will aim to resolve disputes promptly, efficiently and fairly.

The Monetary Authority of Singapore (MAS) will monitor the effectiveness of the BNPL Code and will work with the industry to ensure that risks to consumers of BNPL schemes are being appropriately addressed.

Key Takeaway 

The BNPL Code is a positive development not only for consumers but also for the BNPL industry, as it protects consumers’ interests while increasing trust in BNPL providers.  Consumers should therefore be aware of their rights under the BNPL Code and BNPL providers should ensure to implement the BNPL Code as minimum best practices. As MAS has adopted a wait-and-see approach in regulating BNPL schemes, BNPL providers should keep abreast of any regulatory developments in this area.  

For More Information

OrionW regularly advises clients on financial services and FinTech matters.  For more information about the regulation of financial services in Singapore, or if you have questions about this article, please contact us at fintech@orionw.com.

Disclaimer: This article is for general information only and does not constitute legal advice.