Consumers may get carried away with such payment schemes, so service providers need to be reined in to protect the vulnerable groups.

With buy now pay later (BNPL) payment scheme picking up steam globally amid pandemic-driven economic strife, vulnerable consumers may be exposed to financial risks if they over-consume or over-extend credit lines.

One country has taken steps to minimize BNPL risks: the Singapore FinTech Association (SFA), guided by the Monetary Authority of Singapore, has announced the of a workgroup constituting BNPL fintech firms Atome, Grab, and Hoolah to mitigate risks of consumer over-indebtedness.

The BNPL Working Group is meant to ensure that such payment credit schemes will have a positive impact on Singapore consumers. It is expected to be launched in the second half of 2022.

Framework details

The BNPL Framework will be a compendium of published documents that will address behavioral guidelines and enforcement mechanisms for organizations offering BNPL solutions.

The BNPL WG will hold itself and its members to the highest ethical and professional standards outlined by the BNPL Framework. Workgroup members will also adhere to the following guiding principles during deliberations around key issues: 

  • Upholding fairness, transparency, and inclusivity: All the varied views and concerns of stakeholders from the public and private sectors will be considered, to ensure that decision-making processes are as transparent as possible. Outcomes should serve all consumers well, especially those in vulnerable circumstances. 
  • Protecting consumer interests: A fair and ethical environment for the payment industry will serve to protect consumers’ interests, and instill confidence in consumers around BNPL services and providers. 
  • Focusing on outcomes: The goal is to achieve the best possible outcomes in terms of promoting innovation and consumer safeguards.

The BNPL WG has brought on other industry players such as Ablr, Fave, Latitude Pay, Pace, Rely, Split, and Zip. Collectively, these players offer potential benefits which include the improvement of financial inclusion for underbanked and underserved segments and the democratization of credit for the general populace.

Shadab Taiyabi, President of the SFA, said the workgroup will “ensure that consumer interests are protected, promote growth for industry players,” while Loo Siew Yee, Assistant Managing Director (Policy, Payments & Financial Crime), MAS, said the BNPL Framework “will be an important step forward to formalizing standards for the industry to ensure consumers’ interests continue to be protected.”