Buy now, pay later (BNPL) is a common checkout option across Singapore retailers, although it accounts for only a modest share of overall spending. BNPL lets customers split a purchase into instalments rather than pay the total amount up front. The provider pays the business in full at the time of sale and collects from the customer over the following weeks or months. Many banks in Singapore impose minimum income and age requirements for credit card approvals. BNPL offers an instalment option for shoppers who might not otherwise qualify for a credit card.

In the first half of 2024, BNPL accounted for about 1% of the total value of credit and debit card payments in Singapore, and it continues to grow.

Below, we'll explain how BNPL works between businesses, providers, and customers in Singapore, why it's growing, and what businesses should weigh before they add it to checkout.

Key takeaways

• BNPL allows customers to split payments without needing a credit card, which matters in a market with strict card eligibility rules.

• Providers pay the business in full up front and collect instalments from the customer.

• Where and how BNPL appears at checkout has a direct effect on both conversion and how often customers choose the payment method.

What is BNPL in Singapore?

BNPL is a point-of-sale credit arrangement that lets a customer pay for a purchase in scheduled instalments, instead of all at once. For example, Grab PayLater can split a purchase into four, eight, or twelve payments, with no interest attached if the customer pays on time. Singapore imposes caps on the outstanding payments that customers can maintain with each BNPL provider.

How does BNPL work in Singapore?

The three parties involved in the BNPL process are the customer, business, and BNPL provider. Payment schedules and terms vary by provider, but common timelines include three, six, or twelve monthly payments, usually interest-free. The purchase could alternatively be split into four equal payments with one due at checkout and the rest paid on a biweekly schedule. With a deferred single payment, the full amount might be due in 14 or 30 days, which gives the customer a short interest-free window without splitting the cost at all.

When integrated at checkout, BNPL sits alongside other payment methods through a plug-in, a checkout element the business already uses, or a redirect into the provider's app. Since the business gets paid by the provider rather than the customer, it doesn't wait on the instalments to clear before it receives funds. The provider also handles refund reconciliation, and the business processes the return as it would with a card transaction. Then, the provider adjusts what the customer still owes.

Why is BNPL growing in Singapore?

Singapore's shift towards BNPL corresponds with many Singaporeans' preference for online shopping. E-commerce growth is a big contributor. Online marketplaces like Shopee and Lazada have expanded the product categories available online, from electronics to groceries, which gives BNPL more opportunities to appear at checkout. Younger shoppers are also increasingly comfortable with debt and BNPL offers them easily accessible credit. In a 2024 survey, 72% of Singaporeans aged 30–34 were most likely to have used BNPL in the past, the highest rate among those surveyed. Other research suggests that Gen Zers were the most likely group, with 77% having used BNPL, compared with 47% of millennials.

Mobile-first shopping is popular in the country as well. Singapore has a high smartphone penetration rate for e-commerce (more than 70% for consumer goods). BNPL providers have built their application flows, from approval to repayment reminders, around a phone screen to match how people already shop.

What are the risks of BNPL for businesses?

Customers who would hesitate at a higher price point might complete the purchase when they can split it across several payments. BNPL can lift both average order value and conversion, but it can also cause issues.

Here's what to consider before adding BNPL to your checkout:

• Cost to the business: Providers typically charge a fee for taking on repayment risk and paying the business up front. The economics work only if the lift in sales outweighs that cost.

• Multiple integrations: A business with more than one BNPL option ends up managing separate payment settlement schedules and dispute processes for each provider it works with.

• Customer overextension: In 2022, the Singapore FinTech Association introduced a BNPL Code of Conduct as a direct response to concerns about shoppers' juggling multiple plans across different businesses. Signatories were asked to run affordability checks and cap how many active plans a customer can hold at once.

• Refund complexity: A return on a BNPL order means coordinating with the provider to adjust or cancel the customer's remaining instalments, which takes more steps than refunding a card payment outright.

• Chargeback exposure: Disputes on BNPL transactions route through the provider rather than a credit card network. A business should understand each provider's BNPL process; it might differ from the way it handles chargebacks for cards.

What should businesses consider before offering BNPL in Singapore?

Before adding BNPL, a business can benefit more from understanding its own customers than from assuming it will perform the way it did elsewhere. Testing how BNPL converts at specific order values can provide insight. The business should also weigh whether it's the right choice for its customer base, given that BNPL tends to be more popular with Gen Zers and millennials.

Where BNPL shows up in the checkout flow and how clearly the instalment amounts appear before the customer commits can affect both conversion and how often people choose it. Don't bury the option below other payment methods or display it only after someone's already entered card details; instead, consider showing the per-instalment amount next to the price before checkout.

Singapore has several BNPL providers, each with its own settlement timeline, dispute process, and application programming interface (API). A business that offers more than one option needs a way to manage those relationships without adding extra manual work to monthly reconciliation. A single, unified checkout setup is often the answer.

Which tools support BNPL in Singapore?

Stripe Payments gives businesses a way to add instalment payment methods to checkout without building and maintaining a separate integration for each provider.

Here's how:

• Payment optimisation: Stripe can display payment methods based on signals such as device type, order value, and customer location. That way, BNPL shows up where it's likely to convert rather than on every transaction regardless of fit.

• Checkout flexibility: Businesses that run Stripe's hosted checkout or embedded payment element can add or remove payment methods, including BNPL, from one dashboard, instead of managing separate provider integrations.

• Local and global payment methods: Alongside BNPL, businesses in Singapore can offer digital wallets and card payments through the same setup, which matters in a market where customers switch between payment types depending on what they're buying.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment UIs, access to 125+ payment methods, and Link, a digital wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payment performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments or get started today.