Singapore’s Buy Now, Pay Later (BNPL) sector is set to adhere to a newly established code of conduct aimed at enhancing consumer protection and promoting responsible lending practices. The implementation phase of this code has begun, requiring existing BNPL providers to comply by November 1, 2023, and achieve accreditation by March 31, 2024. New entrants to the BNPL market must also complete this process before launching their services.

Launched in October 2022 by the Singapore FinTech Association, the BNPL Code was developed with guidance from the Monetary Authority of Singapore (MAS). Six major BNPL companies are currently operating under this code: Ablr, Atome, Grab, LatitudePay, SeaMoney, and ShopBack. The code aims to address consumer over-indebtedness and outlines various safeguards to promote fair lending practices.

Key provisions of the BNPL Code include conducting creditworthiness checks, maintaining transparent fee structures, implementing ethical marketing practices, providing voluntary exclusion options, and offering assistance for customers facing financial hardship. These measures are designed to protect consumers from falling into excessive debt while using BNPL services.

In addition to the code, Experian, an IT services company, has established a private credit bureau that will facilitate the sharing of credit information among BNPL providers. An oversight committee will be responsible for monitoring compliance with the code, ensuring that all participating companies adhere to the stipulated guidelines.

To ensure transparency and accountability, the BNPL firms will undergo an independent audit to verify their compliance with the code. The six participating companies have selected PricewaterhouseCoopers (PwC) to conduct the initial assessment, adding an extra layer of credibility to the process.

Upon successful compliance, these companies will receive a trustmark that signifies their adherence to the BNPL Code. This trustmark, valid for three years, will be prominently displayed on their websites and marketing materials starting April 1, 2024.

This initiative comes in response to growing concerns over consumer debt levels and the need for responsible lending practices in the BNPL sector. By establishing a clear framework and accountability measures, the code seeks to build consumer confidence and promote sustainable financial practices in Singapore’s evolving fintech landscape.