Inclusion of Data from "Buy Now, Pay Later" and Licensed Moneylender Arrangements in Consumer Credit Reports
Prime Minister's OfficeSpeakers
Summary
This question concerns the inclusion of credit data from "Buy Now, Pay Later" (BNPL) and licensed moneylenders in consumer reports, as raised by MP Gerald Giam Yean Song. Senior Minister Tharman Shanmugaratnam responded that separate sharing schemes are currently maintained because financial institutions (FIs) provide 98% of credit, though the BNPL Code now mandates a sector-specific credit bureau. He highlighted that the Code formalizes safeguards such as account suspensions and interest caps to mitigate over-indebtedness, noting that BNPL transactions remain small at less than 0.5% of card payments. The Minister stated that MAS monitors the industry and applies existing unsecured credit rules where credit cards are used to fund BNPL purchases to further limit debt risks. Finally, MAS continues to conduct consumer education via MoneySENSE to advise on money management and the potential costs associated with late payment fees in such instalment arrangements.
Transcript
42 Mr Gerald Giam Yean Song asked the Prime Minister (a) whether credit payment data from "Buy Now, Pay Later" (BNPL) arrangements and licensed moneylenders are included in consumer credit reports; (b) what are the considerations for their inclusion or non-inclusion; and (c) what is MAS doing to step up consumer education about the debt risks of taking up BNPL credit arrangements.
Mr Tharman Shanmugaratnam (for the Prime Minister): Financial institutions (FIs), such as banks and non-bank credit card issuers, provide about 98% of all credit extended to Singapore households. The remaining 2% includes credit extended by non-FI entities, such as licensed moneylenders. "Buy Now Pay Later" (BNPL) transactions remain very small, compared to other means of consumer payments, accounting for less than 0.5% of total credit card and debit card payments last year.
We currently have separate credit information sharing schemes for FIs and non-FI lenders, such as licensed moneylenders and BNPL providers. This is, in part, a reflection of market realities. As loans from FIs account for the vast majority of consumer borrowings, FIs are likely to gain only marginal additional consumer credit insights while non-FI lenders can use the expanded dataset to target lower-risk FI customers. We have, therefore, not currently compelled FIs and non-FI lenders to set up a common consumer credit sharing process.
However, for BNPL, in particular, the recently launched BNPL Code limits the risk of consumer over-indebtedness. It formalises safeguards, such as suspension of account on default, no compounding interest or fees and no bankruptcy proceedings. This limits further the benefits of a common credit bureau for FIs and BNPL providers. In addition, where consumers make use of credit cards to make payment for their BNPL transactions, existing unsecured credit rules, such as caps on FI-borrowings, would further mitigate the risk of consumer over-indebtedness.
Nevertheless, similar to credit information sharing schemes for FIs and licensed moneylenders, there are benefits to setting up a BNPL credit bureau to facilitate sharing of consumer outstanding amounts and delinquency status amongst BNPL industry players. The requirement for BNPL providers to participate in a BNPL credit bureau is enshrined in the BNPL Code. BNPL providers will also each ensure that consumers have access to account statements consolidating the total outstanding balance of purchases made through the respective BNPL provider. MAS will monitor developments in the BNPL sector and continue to engage the industry as part of subsequent reviews of the BNPL Code as necessary.
The Monetary Authority of Singapore (MAS), through MoneySENSE, also regularly shares content on the importance of money management and financial budgeting on MoneySENSE’s website and social media channels. These include advising consumers to beware of spending beyond their means as a result of using BNPL schemes and other instalment plans and highlighting the potential costs of such schemes, such as late payment fees for missed instalments.