As I was scrolling through my Instagram feed one day, the magic of targeted advertising seemed to have sniffed out my soft spot for sneakers and served me this ad on Novelship, an online marketplace for limited-edition sneakers and streetwear. 

An Instagram advertisement for a sneaker reselling platform, offering the option to buy now, pay later. Photo Credit: Screenshot from Instagram

The text in red BUY NOW, PAY LATER caught my attention immediately. I decided to check out a pair of shoes I had been eyeing for a while, despite knowing the pitfall of spending money that I don’t have on things that I don’t need. 

After selecting the ‘Pay Later’ option, what I had to pay upfront went down drastically from $1,003.30 to $334.43. I could pay the balance in the next two months. No interest. No hidden fees. As the ad promised. 

To own the shoes, I was required to pay only $344.45 up front instead of the full sum of $1,003.30. Screenshot from Novelship.

I was tempted to whip out my credit card, but knowing that my savings were fast depleting, I didn’t complete the purchase. But I guess many young Singaporeans could have made more impulse purchases when presented with the same option. 

Interest-free installments are not new to Singapore. Furniture and home appliances shops, beauty and wellness salons, watches and jewellery brands routinely work with banks to offer customers a way to own big-ticket items or pay for expensive packages without forking out thousands of dollars upfront.

What’s different with the Buy Now Pay Later (BNPL) model is that it seems to be targeting millennials and Gen-Zs who are shopping a lot more online, whether it’s for high-value or small-value items. 

In Singapore, an estimated 1.1 million people have used BNPL service in 2020, according to a report on Finder, a comparison website. The fintech companies that offer BNPL services here include Rely, Hoolah, Atome and Octifi. Those who are above 18 years old and have a Singapore-issued debit or credit card can use the apps to pay for their purchases in 3 or 4 interest-free installments. 

“It’s really convenient,” says 19-year-old student Lee Zhi Ying, who’s used Hoolah to buy skincare products from Paula’s Choice. “The signup process is fuss-free, and I get automatically charged each month so I don’t have to do anything else,” she explains.

But the convenience does come with some risks, Zhi Ying adds. “It’s easy to be fooled because you’re not charged the full amount upfront. You may start buying more things because your bank balance isn’t going down as much,” she continues.

Sherry Tan, a student at Temasek Polytechnic, shares the same view. “I definitely think that this will lead to impulsive spending, and eventually growing debt if you’re not careful.” 

She adds that she prefers to pay in full upfront as this discourages her from overspending. 

A Monetary Authority of Singapore (MAS) spokesperson says that BNPL can be a “convenient option for consumers who wish to spread out the payments for their purchases”, but “it is important to understand that such repayment options are essentially loans, and do not reduce the cost of purchases.” 

BNPL companies may also charge late fees for those who skip their payment. “If not careful, one could chalk up debt across multiple instalment plans and get into potential financial distress, especially for someone without a stable income,” the MAS spokesperson adds. 

What’s your take on the buy now, pay later model? Let us know below!

Edited by: Anmi Chou Shigeta
Proofread by: Winny Wint Htae