What is the BNPL Code of Conduct and how will it affect you?

BNPL Code of Conduct to take effect on 1 Nov

Singapore. Starting on 1 November, BNPL users will not be permitted to take on more than S$2,000 in outstanding payments with their BNPL provider.

Users who want to take on more debt need to pass an additional credit assessment that will take into account their income and other credit information that will be shared across various BNPL providers. A new credit information-sharing bureau is set to be completed in late 2023.

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Buy Now, Pay Later services to allow its users to pay for purchases over time. It enables people to split the cost of meals, clothing, and other purchases at zero interest, without the need for a credit card. The most popular BNPL providers in the country include ShopBack, Atome, and Grab Financial Group.

According to the new code of conduct, BNPL users will also not be permitted to make further purchases when their payments are overdue.

The code also specifies the guidelines for BNPL providers in marketing practices, as well as fairness and transparency when it comes to fees.

For example, BNPL firms are now required to cap all fees (including late fees) and not charge compounding interests. Additionally, customers must be made aware of the fees in a clear manner.

Consumers are also allowed to make full repayment without early repayment fees. Moreover, BNPL firms are now tasked to extend “hardship assistance” to their clients, and they are also not allowed to initiate bankruptcy proceedings against their clients.

These new rules are part of a new code of conduct that will protect Singaporeans against taking up more debt than they can handle, which has become a common problem since BNPL services became popular in 2020.

The new standards announced on 20 October were developed by the Singapore FinTech Association and hope to promote best practices in BNPL to ensure it continues to help Singaporeans.

An independent committee will be created to ensure that the new rules will be enforced.

BNPL companies will be required to undergo an audit and accreditation process, and if they prove that they are compliant with the new code of conduct, they will be awarded a trustmark which is set to improve customer trust and satisfaction.

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