BNPL’s Regulated Era: When a Checkout Feature Becomes Consumer Credit

By Joris Nijboer, Managing Director at Akkuro Lending

Buy Now Pay Later grew by making credit feel unlike credit. It embedded borrowing directly into the point of purchase, giving consumers greater flexibility while helping merchants reduce friction and support conversion. Customers could pay later without leaving the checkout journey, completing a lengthy application, or waiting for a conventional lending process.

That simplicity helped drive BNPL adoption. But as the market has grown, regulators have increasingly considered whether BNPL should be treated differently from other forms of borrowing.

Across the UK, Europe and Australia, the answer is increasingly no. BNPL is being treated less as a payment feature and more as what it has always been economically: a form of consumer credit.

“Buy Now Pay Later grew by making credit feel unlike credit... Customers could pay later without leaving the checkout journey. That simplicity helped drive BNPL adoption.”

In the UK, the Financial Conduct Authority began regulating Deferred Payment Credit on 15 July 2026. The new regime covers third-party lenders providing the interest-free, short-term agreements commonly associated with BNPL, bringing requirements around information, creditworthiness, financial promotions, complaints and consumer protection.

The European Union is moving in the same direction through the revised Consumer Credit Directive. CCD2 brings more short-term, smaller-value and interest-free lending arrangements within the scope of consumer credit regulation. Member states were required to transpose the directive into national law, with the resulting rules generally applying from November 2026.

Australia moved earlier. Since June 2025, BNPL contracts have been regulated as credit under the National Consumer Credit Protection Act. Providers must hold an appropriate credit license, belong to an external dispute resolution scheme, and comply with responsible-lending requirements adapted to the product.

The details differ, but the regulatory direction is remarkably consistent. Authorities want consumers to understand that they are taking on credit, receive appropriate protection, and be assessed responsibly. They also expect providers to manage complaints, hardship and vulnerability properly, and to demonstrate that these processes work in practice.

For me, this does not mean BNPL is becoming less relevant. It means the sector is maturing.

A smooth checkout experience will remain important. Consumers will continue to expect fast decisions and minimal friction, while merchants will still want finance options that support conversion. But customer experience will no longer be enough on its own. Providers must also demonstrate that the lending operation behind it is responsible, consistent, and controlled.

That becomes more difficult as a proposition scales. At launch, the priorities are usually speed, merchant integration, and adoption. As volumes rise and regulation increase, a different set of questions becomes unavoidable.

These are not abstract compliance questions. They mark the difference between offering a convenient credit feature and operating a regulated lending business.

Cross-border BNPL makes that distinction especially important. A journey that works in one country may require different disclosures, assessments, servicing processes or complaint procedures in another. Retailers understandably want a consistent customer experience, but lenders must satisfy local requirements behind that experience.

Providers therefore need enough standardization to operate efficiently and enough flexibility to accommodate different regulatory regimes. If every region develops its own manual processes and workarounds, the operating model quickly fragments. That makes change slower, control harder to evidence and responsible growth more difficult.

Embedded BNPL adds another complication. Much of the customer journey may take place within a retailer, marketplace or digital platform, but regulatory responsibility remains with the credit provider. Lenders therefore need visibility and control across a journey they may not entirely own.

This is why the next phase of BNPL will not be defined solely by who creates the smoothest checkout. It will also be shaped by those who can support that experience with a credible lending operation.

Regulation can be seen as a constraint, but it also represents a trust moment for the sector. Consumers need confidence that short-term credit is offered responsibly. Merchants need finance partners that can support conversion without introducing unmanaged regulatory risk. Boards and investors need evidence that growth is sustainable.

The providers best positioned for BNPL’s regulated era will not be those that simply add more compliance checks to an existing checkout journey. They will be those that recognize regulation as part of the product itself, and combine convenience with the transparency, consistency and control expected of consumer lending.

BNPL is not disappearing. It is becoming part of the mainstream regulated credit landscape. That does not end its evolution; it raises the standard for the providers that want to lead it.