Take-up of Buy Now Pay Later Services among Those Aged 21 and Below
Prime Minister's OfficeSpeakers
Summary
This question concerns the prevalence and debt defaults of Buy Now Pay Later (BNPL) services among individuals aged 21 and below, as raised by Mr Melvin Yong Yik Chye. Senior Minister Tharman Shanmugaratnam responded that while providers generally exclude those under 18, the Monetary Authority of Singapore lacks specific usage data for users aged 18 to 21. He highlighted the industry’s BNPL Code, which limits credit to $2,000 without additional assessments and mandates account suspension upon any missed payment. Safeguards include capped late fees, no compound interest, and a commitment to offer repayment assistance instead of initiating bankruptcy proceedings. Senior Minister Tharman Shanmugaratnam stated that MAS will monitor the implementation of these measures to mitigate the risk of consumer over-indebtedness.
Transcript
54 Mr Melvin Yong Yik Chye asked the Prime Minister (a) whether MAS has data on how prevalent is the use of Buy Now Pay Later (BNPL) services among those aged below 21 years old in the past three years; (b) whether there have been cases thus far of such youths being unable to repay their debts incurred via BNPL services; and (c) what have the consequences been in these cases.
Mr Tharman Shanmugaratnam (for the Prime Minister): Buy Now Pay Later (BNPL) service providers do not, as a market practice, open accounts for users under 18 years of age. As for BNPL users aged 18 to 21, the Monetary Authority of Singapore (MAS) does not have customer and default data.
The existing features of BNPL schemes limit the extent of debt accumulation and the impact of a default for all users, including those below 21 years old. The BNPL Code launched by the industry earlier this month stipulates several measures to achieve this. Users will not be allowed more than $2,000 in outstanding payments unless an additional credit assessment is performed. They will not be allowed further transactions once they miss a payment. Late payment fees are capped, and outstanding amounts will not be subject to compound interest. BNPL service providers have committed to not initiate bankruptcy proceedings against users and consider extending assistance to users who face financial difficulties, by working out mutually acceptable repayment arrangements.
MAS will monitor the industry's implementation of the safeguards set out in the BNPL Code and continue to work with the industry to mitigate the risk of consumer over-indebtedness.