Hong Kong

Status

No steps taken to implement legislation to expressly regulate BNPL.

Is the country considering regulation?

BNPL services as credit services are already regulated under existing legislation in Hong Kong.

Current state of regulation regarding BNPL?

On 2 September 2022, the Hong Kong Monetary Authority which regulates authorized institutions (i.e. banks) published a notice entitled “Enhancing Consumer Protection in Respect of ‘Buy Now, Pay Later’ Products” setting forth some enhancing measures which authorized institutions were expected to put in place before end of 2022. In the notice, HKMA states that BNPL products are credit products and if offered by banks will be subject to the Code of Banking Practice. If banks engage or partner with third party, principally third party solutions providers, they are responsible for their acts insofar as consumers are concerned.

The enhanced measures which banks are required to provide are:

Responsible borrowing – banks will need to remind consumers that they should only borrow if they can afford the repayment and that BNPL is a credit product.

Creditworthiness assessment – banks are required to assess the ability of consumers to repay.

Disclosure of fees and charges – all fees, charges and interest must be disclosed.

Statement of facts – banks are required to state if a borrower does not fulfil the repayment obligations, it may adversely affect the borrower’s credit records maintained at the credit reference agencies and consequently further access to credit in the future.

Chargeback mechanism – if the BNPL is offered through a bank’s credit card product, consumers should be offered the same chargeback protection.

For entities which do not hold a banking licence, the provision of BNPL as a credit service is subject to the Money Lenders Ordinance (Cap. 163) and a money lenders licence is required.

Whether BNPL effected through deferred payment method is subject to money lending licence will depend on its context.

Outline the proposals to change regulation?

None.

What if any will be the consequences of BNPL legislation on merchants, brokers and consumers.

Existing requirements will continue to apply.