New 'buy now, pay later’ code of conduct aims to protect consumers

Customers will not be allowed to chalk up more than $2,000 in outstanding payments

- Chor Khieng Yuit

A code of conduct outlining best practices for "buy now, pay later" (BNPL) providers was introduced on Thursday following seven months of discussions among industry players, and will take effect on Nov 1.

The code was developed by the Singapore FinTech Association (SFA) and eight industry players including Atome, Grab Financial Group, and Shopback, with Monetary Authority of Singapore (MAS) guidance.

It was initiated following concerns that the emerging payment option was luring people into debt, given that BNPL allows consumers to defer payment on goods or services without having to pay interest. They either repay the purchase price in one lump sum or in three to four equal instalments, usually over two to three months.

Because consumers are able to borrow for "free" for short periods and because their purchases are split up into manageable repayments, there have been concerns that people will overspend and end up deep in debt.