The National Credit Bureau (NCB) is calling on providers of buy now, pay later (BNPL) services to improve risk controls to prevent misuse of the system to create informal loans.
Surapol Opastien, chief executive of the bureau, said BNPL is a type of short-term financing that allows consumers to make purchases and pay for them at a future date.
BNPL expands access to financial services for certain consumer segments and enhances financial inclusion, he said.
However, some people are using this service as a channel to create informal loans, said Mr Surapol.
This practice could enable loan sharks and worsen household debt, meaning BNPL service providers, both banks and non-banks, should take steps to mitigate these risks, he said.
Concerns arose after a report emerged that a Shopee Thailand customer had used the platform’s SPay Later service, borrowing from it to lend money to another individual for payment of electricity bills and charging exorbitant interest rates, resembling loan shark practices.
SPay Later is managed by Sea Money Co, a subsidiary of Sea Group, the Singapore-based parent of Shopee. Sea Money Co received approval from the Bank of Thailand to provide BNPL services.
The exploitation of BNPL for loan sharking purposes brings higher risks, particularly debt defaults and financial fraud, the central bank warned.
In response to the concerns, Kasikornbank announced on its website it was suspending the acquisition of new customers for its K Pay Later service, which was previously available through its K-Plus mobile banking app.
Under the K Pay Later scheme, customers were allowed to pay for various goods and services in instalments, including electricity bills, fuel purchases, supermarket purchases and dining expenses.
The bank transferred digital loans to the e-savings accounts of K-Plus users, who were approved for the loan products.
KBank established a maximum credit line of 20,000 baht per customer for its digital personal loans, imposing a ceiling interest rate of 25% per year and providing a longer debt instalment period, extending up to five months.
Krungsri Consumer, the unsecured loan unit of Bank of Ayudhya, also offers BNPL in collaboration with several partners.
Krungsri partners with HomePro to provide BNPL services with a maximum instalment period of 36 months exclusively for goods purchased at HomePro stores.
These services are accessible to Krungsri’s customers through its UChoose mobile app.