Buy Now. Pain Later?

With the rise of Buy Now, Pay Later platforms in Singapore, we have to ask: Is the promise of interest-free loans too good to be true?

- Karishma Tulsidas

When 32-year-old editor Samantha Tan signed up for a BNPL (buy now, pay later) platform last year, it was mostly to redeem discounts. Her first few transactions were seamless, but it was only when she tried returning an online purchase that things got complicated: The staff told her to complete the instalments in full so they could give her a cash refund at the store.

But because it was an online purchase, she had to schedule a pickup, which never happened. She’s now stuck with the items, and does not have a solution at hand. She adds: “The annoying thing was that I did have the money to spend. It was just an impulse buy at the end of the month and I wanted to feel less guilty about spending.”

You might have seen the eye-catching signs of Atome, Hoolah and Pace at the check-out counters of both offline and e-commerce retailers. This is how they work: You rack up a bill of, say, $200, and you have the option to pay the full sum instantly using conventional methods (cash, debit or credit card), or use a BNPL platform to split the interest-free payment over a couple of months.

Many retailers also offer rewards and discounts only for BNPL users. You also have the option of clearing your debts ahead of time, without incurring a fee.

In Singapore, a 2021 research report by consumer research and analytics company Milieu Insight noted that around 19 per cent of the adult population have used a BNPL platform, out of which, 73 per cent attested that they would continue doing so. In 2021, BNPL transactions amounted to US$317 million ($441 million) in Singapore (which accounts for less than 0.5 per cent of total credit and debit transactions), and are predicted to increase to an estimated US$3 billion ($4 billion) by 2028, according to a PayNXT360 report.