SG-based BNPL players launch code of conduct to self-regulate

A group of fintech players have launched a buy now, pay later (BNPL) code of conduct in Singapore to ensure ethical practices and protect consumers in the industry.

Singapore Financial District / Photo credit: Shutterstock

The group, which is being guided by the Monetary Authority of Singapore (MAS), is made up of the Singapore FinTech Association and fintech firms, including Atome, Grab Financial Group, ShopBack, Ablr, Latitude Pay, Pace, Split, and SeaMoney.

The group has designed the code to safeguard consumers from over-indebtedness via several measures such as creditworthiness safeguards, transparent fees and clear disclosures, ethical marketing practices, voluntary exclusion by customers, and financial hardship assistance.

To encourage compliance with the code, BNPL providers will be required to do an audit and accreditation process, which will earn them an accredited trustmark.

The group is also planning to set up a credit-information-sharing bureau. This and the accreditation process are expected to be completed by late 2023.

The creditworthiness safeguards put an SG$2,000 (US$1,400) ceiling on a consumer’s outstanding payments at one time, unless they complete an additional credit assessment, which includes revealing their income and sharing their credit information across all BNPL firms.

Fair fees will require BNPL providers to cap all fees and make interest non-compounding. Consumers will also be able to make full repayment at any time without early repayment fees.

As for ethical marketing, BNPL advertising must comply with the relevant advertising codes and not be misleading or deceptive. Consumers can also voluntarily exclude themselves from BNPL services and promotional materials.

Under financial hardship assistance, BNPLs and customers will make mutually acceptable payment arrangements, during which providers will not allow any further transactions nor initiate bankruptcy proceedings.

The group began developing the framework in March 2022 to self-regulate, following comments by MAS that it would review regulation involving BNPL services.

Singapore’s BNPL market is expected to hit US$773.9 million in payments this year.

See also: BNPL struggles amid global recession – except in Southeast Asia

Currency converted from Singapore dollar to US dollar: US$1 = SG$1.43