A few years ago, when fintech companies started offering "buy before you pay" (BNPL) services, people were not optimistic about the innovation.。However, demand for the service has surged as brick-and-mortar stores have closed and people in certain industries have lost their jobs。

BNPL is a short-term financing scheme that divides purchases into small payments at low or no interest.。Retailers offer installment plans to customers at the point of sale (through BNPL providers), while many banks offer installment plans to customers after purchase。The number of repayments varies by supplier, most BNPL providers divide repayments into 3-4 installments, while some can be as long as 12 or 24 months。

According to statistics, BNPL services in the Asia-Pacific region are expected to achieve 20.4% growth and reach $198.2 billion in 2023。In the context of increasing e-commerce penetration, the BNPL industry in the Asia-Pacific region has recorded strong growth in the past four quarters, with Singapore, Malaysia and Indonesia in Southeast Asia.。

However, while BNPL does make payments easier, consumers may also end up with more debt。A study by Deloitte shows that BNPL consumers need to make payments while making ends meet - 68% of BNPL users admit that they spend more money than usual when shopping with BNPL。

BNPL providers do not require credit background checks on users, which is one of the reasons for this。Users only need a valid bank account to use the BNPL service without any other financial background checks。

In light of this pressure, some countries are currently tightening regulations on BNPL services to avoid consumers falling into a debt trap.。

Existing BNPL providers in Singapore include Ablr, Atome, Grab, LatitudePay, ShopBack and SeaMoney, some of which also have operations in Southeast Asia.。For example, Grab's BNPL service is available in Malaysia, Indonesia and the Philippines。

Since then, a "buy before pay" working group consisting of the Singapore FinTech Association (SFA) and industry insiders has been established under the supervision of the Monetary Authority of Singapore (MAS).。

The working group has just published the BNPL Code of Conduct。The guidelines are now in the next phase of implementation, requiring all existing BNPL providers in Singapore to comply with the guidelines from 1 November 2023 and be certified by 31 March 2024; any new BNPL provider should also complete certification before offering BNPL services in the country.。

In order for BNPL providers to comply with a set of industry standards, all providers shall meet and comply with the following requirements:

• Global information technology services firm Experian sets up a private credit bureau to improve credit information sharing process。Credit information sharing will allow BNPL to understand the customer's outstanding balances between BNPL providers when conducting further credit evaluations。
• BNPL providers must also be audited by an independent evaluation body to ensure they meet the guidelines.。If they are successfully certified, they can display a certified trust mark indicating that they have met the guidelines for three years before they need to be recertified。PricewaterhouseCoopers (PwC) has been designated by all six designated BNPL providers as the independent assessment body for the first assessment.。By April 1, 2024, the trust identity will be granted to an accredited service provider, and consumers can view the trust identity on the BNPL provider's website and other materials。
• Today, a supervisory committee (OC) of qualified and experienced members has been established to oversee and monitor compliance with the BNPL guidelines and thereby foster a high standard of specialization in the industry.。

According to a statement from the SFA, the code of conduct promotes industry best practices by prescribing safeguards to reduce the risk of consumer over-indebtedness.。Providers that have done so to date include Ablr, Atome, Grab, LatitudePay, SeaMoney, and ShopBack。

All existing BNPL providers in Singapore adhere to the Code of Conduct to ensure that people can use BNPL services in a protected and trusted environment.。SFA President Shadab Taiyabi said: "The Code is robust and highly enforceable, making it significant for the industry as a whole.。"

At the same time, Andrew Tan, executive director of MAS Prudential Policy, stressed that the industry has been working hard over the past year to implement the standards and safeguards of the BNPL Code, especially in establishing credit information sharing processes.。

He said: "We hope that all BNPL businesses will be successfully certified by April 2024 and receive a trust mark that will help consumers identify them.。This will improve the consumption outcomes of BNPL users and reduce the risk of their debt accumulation。"