Buy Now Pay Later (BNPL) services, which enable consumers to pay for goods and services in interest-free instalments, are fast gaining traction. While they are innovative and fill a gap in the access to credit for certain segments of the population, they also raise concerns relating to consumer debt, which calls for some form of regulation. Although BNPL transactions in Singapore still amount to barely 1 per cent of total debit and credit card payments, they grew almost four-fold to $440 million in 2021, from $114 million in 2020. The Worldpay 2022 Global Payments Report projects that they will continue to grow by about 40 per cent a year till 2025. Besides fintechs, established companies such as Apple, PayPal, Visa and Mastercard have also moved into the BNPL business. In some countries, such as Britain, even banks have done so.

BNPL services have many benefits. They are convenient and user-friendly, with many requiring no credit checks. They offer zero per cent interest rates, although they have late-payment fees. Unlike credit cards, they do not roll over debt with high interest charges. They effectively provide credit to those who do not qualify for credit cards or have no credit history. And for merchants, they offer a new marketing channel.