The Bank of Thailand (BOT) is preparing tighter regulations for buy now pay later (BNPL) services following concerns over rising levels of bad debt among younger borrowers.
BOT Governor Withai Rattanakorn announced the planned measures during the Governor Connect event on Tuesday, June 2. The new rules are expected to be introduced by the end of this year.
According to Withai, the proposed regulations will cover several areas, including minimum age requirements for BNPL users, eligible product categories, minimum product values for instalment purchases and maximum interest rate limits.
The governor said the measures are being developed in response to increasing levels of non-performing loans among younger generations and first jobbers.
He warned that many young consumers have become trapped in debt after using instalment plans to pay for a wide range of purchases, from food and drinks to luxury items.
Withai cited examples of consumers using instalment plans for purchases as low as 50 baht. He said some people reportedly paid for a 50-baht chicken rice meal over three to four months, while others financed a bubble milk tea costing 106 baht through a four-month repayment plan.
According to Withai, some of these arrangements carried hidden interest costs of between 16% and 18%.
The governor reported further that around 25 million people in Thailand currently have debt obligations, while 52.7% of those aged 20 to 35 are in debt. Within that age group, 27% of debt has become non-performing debt, a figure Withai described as concerning.
Despite the planned regulatory changes, Withai stressed that buy now pay later services are not inherently problematic. He said the key issue is the promotion of credit products to consumers who may not have the financial capacity to repay their obligations.
One of the measures being considered is a ban on instalment plans for food, beverages and other low-value products. The BOT also plans to encourage BNPL providers to adopt more responsible lending practices alongside the new regulations.
Withai said the proposals are currently undergoing a public consultation process. He expects the review and preparation period to take around four to five months before the final measures and regulatory guidelines are issued.
The BOT is aiming to release the new framework between October and November this year.
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