New BNPL Guidelines now in effect

Singapore. The new guideline for BNPL services in Singapore came into effect on 1 November. According to experts, it is a much-needed step to help people in Singapore avoid overspending.

BNPL services are extremely important for users who want to pay for their purchases over time at zero interest, without the need for a credit card.

More from OMY: What is the BNPL Code of Conduct and how will it affect you?

The new guidelines included a S$2,000 cap on outstanding payments people have with each BNPL provider. This can only be raised if they go through additional creditworthiness assessments.

Experts say the new code of conduct only acts more as a self-regulation placed by the industry, and that it is a positive move.

“It solves quite a lot of problems such as consumers not knowing what they are getting into (and) thinking it’s free money, rather than lending,” stated Mr. Anton Ruddenklau, partner and head of financial services at KPMG Singapore, adding that BNPL services are not free money. Consumers are just being lent money for products they have purchased.

However, the guidelines may not be enough. The Consumers Association of Singapore said that it hopes to see a lower cap on maximum purchases for people under 21 years old. Additionally, BNPL services should also require proof of income.

“The limit can be based on the credit information sharing arrangements that BNPL providers have committed to and vary depending on each customer’s income,” shared Mr. Wong Nai Seng, regulatory strategy leader at Deloitte Southeast Asia.

“For example, customers with no or low income, (such as) students, should have lower spending limits,” he added.

In late 2023, BNPL services will also be launching a credit information-sharing bureau. This will help providers share information with one another on the outstanding amounts and delinquent status of customers.

More from OMY: Singapore: BNPL to be the fastest growing online payment method by 2025, while credit card use to fall

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