My First Time... Trying A Buy Now Pay Later (BNPL) Scheme

When you’re deep into the #adulting life, you’ll come to accept that every splurge will inevitably haunt you down the road one way or another.

Had a lavish night out at a fancy restaurant? Watch as you come home and realise you’re in need of a grocery run that will set you back almost as much. Fancy that ultra aesthetic chair? Don’t be shocked when your air-conditioner chooses to break down at that exact moment and you’ll have to fork out the moolah to repair it.

Sure, you can mitigate such unforeseen circumstances with an adequate emergency cash fund and sound budgeting. But it always seems like you’re short on funds every time you’re looking to make a purchase, doesn’t it?

Enter Buy Now Pay Later (BNPL) services. This short-term financing option has been a game changer for me when it comes to buying big ticket items. What once felt like an insurmountable purchase feels much more attainable now there’s a way to break them down into instalments. Let me give you the lowdown on BNPL providers and my own personal experience with them.

What are BNPL schemes?

BNPL refers to a payment model where you can buy goods and services from a partner merchant and defer their payment through a flexible instalment plan instead of paying the full amount upfront. BNPL providers typically charge no interest, making them even more attractive to consumers.

BNPL services have gained popularity in Singapore over the last couple of years, especially when it comes to the e-commerce industry. In fact, BNPL payments in the Asia Pacific region are expected to increase by 20.4% surpassing US$198.2 billion (SG$265.2 billion) in 2023.

My experience with BNPL providers in Singapore

Full disclosure - I’m basing this on my own frame of reference, whether I myself have personally heard of them or used their services. But I’m sure you might have come across these companies as well:

Grab PayLater - I’m pretty sure every Singaporean who owns a smartphone has the Grab app on their device. But it’s not just a ride-hailing option anymore. It has grown to become a super app, intrinsically tied to everyday life, from ordering takeaway food to paying your bills.

Did you know they have a BNPL service as well? I first found out about it during the pandemic. It’s incredibly easy to get hooked on it, especially if you are an existing Grab user.

You can defer your payments in the next month or within 4, 8 or 12 instalments. It’s super flexible, I must say. And with the added incentive of earning Grab Reward points, it makes for an attractive option for most of my Grab transactions, from rides to deliveries. This is my current go-to BNPL option since I’m such a regular Grab user anyway.

Atome - A prominent player in Southeast Asia, Atome's entire business revolves around the payment model of three interest-free instalments with a super intuitive app to help track your purchases and partnerships with all the major retailers in the country, including Sephora, Shein, Zalora, Zara and Agoda. My girlfriend loves the app and uses it for all her beauty product hauls. Let me tell you, boy does she take full advantage of the BNPL selling point.

Singtel PayLater - As Singapore’s biggest telecom company, it’s no surprise that they have dipped their toes in this payment model as well. If you’re a techie who wants a reliable BNPL option for all your gadget purchases, this app would be your best bet.

Their merchant partners include smartphone brands, laptops, smart watches, TV monitors, you name it. You can make payment via credit card and even eNETS, plus their instalment plans can stretch from 12 months, 24 months, or even 36 months. 

Here are the pros and cons of BNPL schemes

The advantages of BNPL schemes are fairly self-explanatory. They allow customers the flexibility to make purchases without paying the full amount upfront. This can be especially handy when you happen to be short on cash or facing temporary financial constraints during your point of purchase.

It is often a quick and straightforward process, offering convenient payment options during online or in-store checkouts. The fact that most BNPL providers charge interest-free instalments makes them highly attractive as well. It definitely helps to increase your purchasing power, letting you buy higher-ticket items and pay for them over time, making expensive products more accessible.

The downside is that you may incur interest charges and late fees. The cost of these fees can add up, making the overall purchase even more expensive. You might risk overextending your finances beyond what you can afford, unnecessarily accumulating debt if you are not careful.

The potential for impulse buying is always there so always make sure you consider your financial situation and read the terms and conditions of BNPL agreements before going all in.

More BNPL regulations to be implemented in the near future

The Singapore FinTech Association partnered a number of industry players to implement the BNPL Code back in October 2022, under the guidance of the Monetary Authority of Singapore (MAS). This is done to better regulate such service providers and protect us as consumers. For instance, BNPL services can only be offered to customers who are 18 years old and above. Customers will also not be allowed to accumulate more than $2,000 in outstanding payments at any one time unless they have fulfilled additional credit assessment criteria. 

The eight participants in the BNPL working group, which include Grab and Atome, were audited in November 2023 and will also be accredited by 31 March 2024, after which they will earn a trustmark. 

Ultimately, BNPL schemes are a great short-term financing tool that offers more flexibility when it comes to payments. But with great purchasing power comes greater financial responsibility. Keep that in mind the next time you embark on that shopping spree.

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