Gerald Giam calls for MTI to enforce fairer payment terms for small merchants on e-commerce

SINGAPORE: Gerald Giam, Workers’ Party Member of Parliament for Aljunied GRC, called on the Ministry of Trade and Industry (MTI) to take a stronger stance with large e-commerce platforms to enforce fairer and more timely payment terms for small merchants, aiming to alleviate their cash flow challenges.

In his Parliamentary Question on 12 November, Giam raised concerns about the impact of a major e-commerce platform’s recent extension of payment terms on small businesses in Singapore.

He specifically asked whether MTI had assessed the effects of this extension and whether regulations could be introduced to ensure that large e-commerce platforms release payments promptly to support small merchants and prevent delays in cash flow.

In response, Minister of State for Trade and Industry Alvin Tan stated that the Government had engaged with the platform after receiving feedback.

The platform had updated its payment terms in June 2023 to withhold payments until the buyers’ return or refund period had ended.

This change was implemented to strengthen consumer protection and fraud detection measures.

Tan clarified that these payment terms were part of private commercial agreements, and advised the feedback provider to engage directly with the platform regarding their concerns.

He also noted that in the case of disputes, merchants could pursue established legal avenues, such as filing a civil claim in court.

Giam highlights limited negotiating power and financial struggles of small merchants compared to larger firms

Giam further highlighted that small merchants have limited negotiating power and face significant financial constraints compared to larger firms.

He asked what immediate support options, beyond long-term digital grants, could be offered to help small merchants mitigate cash flow gaps caused by delayed payments on major platforms.

In his reply, Tan reiterated that the changes to payment terms were part of a commercial arrangement between the platform and merchants.

However, he emphasised that MTI and Enterprise Singapore had taken steps to support small businesses. These included reaching out to the feedback provider and facilitating contact between the feedback provider and the platform.

Tan also mentioned that the Government was collaborating with e-commerce platforms, including this one, as well as heartland retailers, to help adopt e-payments and digital commerce solutions.

Further, he outlined various initiatives designed to uplift the broader ecosystem, support SMEs in their internationalization efforts, and help small merchants kickstart their e-commerce journey.

For those experiencing cash flow difficulties, Tan encouraged merchants to contact financial institutions listed on Enterprise Singapore’s website and apply for working capital loans under the Enterprise Financing Scheme, underscoring that these measures are available to support SMEs and merchants facing cash flow challenges.