ail. “All major banks offer credit card-based instalment facilities on purchases.” BNPL payments were expected to reach US$1.1 billion in Singapore in 2022, according to ResearchAndMarkets. And the medium to long term growth trajectory of the sector looks to remain strong, with third-party payment service providers such as Hoolah and Atome gaining prominence.  “The Monetary Authority of Singapore is also monitoring developments in the BNPL sector and working with the industry participants to address any risks to consumers, we expect the BNPL solution to take hold in coming years,” Teja added. It comes as some of the leading BNPL players, including Klarna and Afterpay, have seen their growth slow amidst the economic downturn and questions about the sustainability of the sector. But Ravi Sharma, lead banking and payments analyst at GlobalData, doesn’t see this dampening demand for BNPL in Singapore.  “BNPL solutions have emerged as a viable payment option for consumers who do not have access to traditional credit, allowing them to pay for their purchases conveniently at later dates in the form of instalments,” he told Inside Retail. He noted that the pandemic followed by surging inflation have adversely affected consumers’ disposable income, which is driving the demand for short-term financing, thereby benefiting BNPL service providers.  “To benefit from this trend, international BNPL service providers are also entering Singapore. In February 2022, Australia-based Zip also entered Singapore in collaboration with Singtel Dash, allowing the latter’s customers to use Zip’s pay-later service for online and in-store purchases,” Sharma said.  Rise of online payments E-commerce payments in Singapore have traditionally been dominated by payment cards, with consumers favouring credit and charge cards due to the value-added benefits, such as interest-free instalment payment options, reward programs, cashback and discounts. Alternative payment tools, such as Apple Pay, PayPal and GrabPay, collectively account for a 37.9 per cent share in 2022 – up from 30.6 per cent in 2021 – while bank transfers are declining in popularity, falling from 18.4 per cent in 2021 to 15 per cent in 2022. Cash payments are also on the decline due to a growing preference for electronic payments. “Efforts from the government, financial authorities, a high level of awareness of electronic payments, and developing payment acceptance infrastructure have encouraged consumers to prefer payment cards,” Sharma said. He believes the preference for payment cards is mainly due to value-added services such as reward points, discounts on purchases at partner retailers, instalment facilities and other benefits.  The impact of inflation Sharma noted that e-commerce businesses have largely recovered from the pandemic and returned to growth, but rising inflation and geopolitical uncertainties are a major concern in the medium-term.  “Singapore’s retail sector trajectory in 2022 has been influenced significantly by the significant rise in inflation. In August 2022, the country’s annual inflation rate increased to 7.5 per cent, its highest level since June 2008,” he said. The annual inflation rate in 2022 was 5.9 per cent, a significant increase compared to 2.3 per cent in 2021. In August 2022, the cost of transportation rose by 20.2 per cent, housing by 6 per cent, and clothing by 8.7 per cent.  “Supply chain disruptions caused by the conflict between Ukraine and Russia and China’s zero Covid policy were instrumental in pushing up inflation in Singapore,” he observed.”Although at a lower rate, inflation will continue to hamper consumers’ purchasing power in 2023.” Amid such inflationary conditions, he noted that Singaporean consumers have been cutting down on their expenses. As a result, growth in all retail sectors except food and grocery will slow down in 2022 and 2023.  As the adverse impact of rising inflation is usually hardest on low- and middle-income consumers, growth in the mass market and value apparel space will significantly slow down.