BNPL code of conduct may include credit assessment, data sharing: Tharman
THE code of conduct being developed for Buy Now Pay Later (BNPL) providers in Singapore is on track to launch this year and will include measures to limit consumers’ extent of debt accumulation, Senior Minister Tharman Shanmugaratnam said on Monday (Sep 12) in a written reply to a parliamentary question.
The code may require a creditworthiness assessment before a user can exceed a stipulated credit cap with a BNPL provider. Other measures being considered include suspending users from making further BNPL purchases once a payment is overdue and not charging compounding interest on outstanding amounts.
“BNPL providers are also exploring sharing with one another information on customers’ outstanding amounts and delinquency status to facilitate better assessments of their customers’ creditworthiness,” Tharman added.
He was responding to queries from Member of Parliament Derrick Goh on whether an industry code for effective industry self-regulation will be developed and what measures are being considered.
Goh also questioned whether the government will consider requiring BNPL providers to report such loans to the credit bureau for financial players to properly assess consumers’ creditworthiness – an issue that The Business Times had previously flagged. Separately, the Consumers Association of Singapore has also called for stronger safeguards in BNPL schemes, having received 18 consumer complaints involving such service providers from Jan 1, 2021 to Jun 23 this year.
Back in March, the Singapore FinTech Association set up a BNPL Working Group, under the guidance of the Monetary Authority of Singapore (MAS), to develop an industry code of conduct.
BNPL transactions in Singapore amounted to S$440 million last year, up from S$114 million in 2020. Nonetheless, they amounted to less than 1 per cent of total credit and debit card payments last year, Tharman noted.
“MAS will continue to monitor developments in the BNPL sector and work with the industry to address any risks to consumers,” he said.
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