This item originally appeared on finews.asia.
Singapore is setting up a Buy Now, Pay Later Working Group (BNPL WG) as an industry-led initiative to develop a framework for the market, the Singapore FinTech Association (SFA) said Monday.
“The BNPL framework will mitigate risks of consumer over-indebtedness, ensuring that BNPL offerings will have a positive impact on Singapore consumers, as well as continue to benefit the ecosystem,” SFA said in a press release.
The working group will have major BNPL players Atome, Grab and Hoolah as members, under the guidance of the Monetary Authority of Singapore (MAS), the release said. Other industry players, including Ablr, Fave, Latitude Pay, Pace, Rely, Split and Zip, will also participate in the working group, the release said. The working group is also seeking input from other organizations currently offering or planning to offer BNPL services, SFA said.
Loo Siew Yee, assistant managing director for policy, payments and financial crime at MAS noted BNPL services currently offer some safeguards on excessive debt accumulation by consumers.
“The BNPL Framework will be an important step forward to formalising standards for the industry to ensure consumers’ interests continue to be protected,” she said in the statement.
The framework, which will include behavioural guidelines and enforcement mechanisms, is expected to be completed by the second half of this year, SFA said.
In Singapore, BNPL adoption is expected to grow at a compound annual growth rate of around 18 percent over 2021 to 2028, projected to reach a gross merchandise value of $1.84 billion by 2028 from $370.8 million in 2020, according to research from Research and Markets published in August 2021.
Around 38 percent of Singaporeans, or around 1.1 million people, had used a BNPL service, according to a survey of 1,008 Singaporeans over the age of 16 conducted by consumer research firm Milieu Insight in October 2020.
The data showed not all is rosy in Singapore’s BNPL offerings.
Not All Is Rosy
Just over half of respondents who were unemployed and not looking for a job have used BNPL, above the national total, the data showed. Around 27 percent of Singaporeans surveyed said they were worse off financially due to a BNPL mistake, with many saying the reason was making an impulse purchase, the data showed.
Around 11 percent said they’d overstretched their budget to the point of struggling to pay for other expenses, and around 7 percent said their bank account was over-drafted due to BNPL use, the survey found.