HKMA unveils tougher regulations for BNPL sector


The Hong Kong Monetary Authority (HKMA) has issued a circular to banks on buy now pay later (BNPL) products to implement new consumer protection measures.

HKMA underlined that BNPL products are ‘still in the initial stage of development’ in Hong Kong. While some BNPL products are offered by non-bank FinTechs, some local banks have begun launching payment products that are marketed as BNPL.

The measures include a requirement for banks to include the message of ‘To borrow or not to borrow? Borrow only if you can repay!’ in the advertising and promotional materials for BNPL products.

In addition, banks should not create an impression that BNPL does not entail borrowing. Banks must clearly and prominently disclose in the marketing and promotional materials of BNPL products that they are ‘credit products’. When engaging or partnering with e-commerce platforms, banks should assess the potential implication on impulsive borrowing if the BNPL products are set as the default or preferred choice of payment methods.

HKMA will also require banks to ensure that the relevant fees and interest charges are disclosed in a clear manner in the advertising and promotional materials of BNPL products, and the relevant fees and interest charges should be taken into account in the calculation of APR for customers’ reference.

Banks will additionally be required to specify in the Key Facts Statement of a BNPL product that if the borrower is overdue in repayment, it may adversely affect the credit records of the customer. Banks should also ensure that the customer is duly informed about whether and how the chargeback mechanism is applicable to the BNPL product, and during the approval process for any applications for BNPL products, banks must assess the applicant’s credit status and take into account the applicant’s ability to repay.

HKMA said, “Banks are required to implement the above measures by the end of this year in order to enhance consumer protection.”

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