BNPL new regulations for retailers

Recently, Buy now, pay later (BNPL) has transformed how consumers pay for goods and services, quickly becoming a go-to option at checkout. From fashion and electronics to health & beauty, shoppers - especially younger generations - have embraced the ease and flexibility BNPL offers.

While BNPL might feel like a modern innovation, the concept itself isn’t new. Consumers have long benefited from ‘repayment holidays’ and deferred payment plans on traditional credit agreements. What’s changed is how this model has been repackaged: today’s BNPL services allow shoppers to split the cost of much smaller purchases, often instantly and without any affordability checks, all outside the scope of standard credit regulation. That convenience has driven widespread adoption, but it’s also exposed gaps in consumer protection.

Now, with usage soring, so too has scrutiny. In the UK, regulators are stepping in to ensure BNPL operates with the same standards as other forms of credit. For retailers, this will bring both challenges and opportunities. Here’s what’s changing - and how to stay ahead.

Why is BNPL facing new regulations?

BNPL’s rapid growth has highlighted concerns around affordability, transparency and consumer protection. Many customers are drawn to BNPL because it feels simpler and less intimidating than credit cards or loans. However, without robust affordability checks or clear disclosures, there’s a risk of shoppers taking on more debt than they can manage.

According to the FCA’s reviews, a significant number of BNPL users, particularly younger consumers, may not fully understand the consequences of missing payments. This has led to calls for stronger safeguards, bringing BNPL more in line with regulated credit products.

For customers, this can lead to mounting debt, late fees, and potential credit score damage; often without them realising until it’s too late. But it’s not just the customer who suffers. For retailers, these outcomes can translate into increased complaints, damaged brand trust, and reduced repeat business. If shoppers associate BNPL with financial stress or confusion, they may hesitate to use it again and there is an increased risk that they might avoid your brand altogether.

This has prompted the FCA and UK government to act, with calls for stronger safeguards that bring BNPL more in line with other regulated credit products. The goal is to protect customers and the retailers who serve them by making BNPL a more transparent, fair, and sustainable way to pay.

What will the new rules likely cover?

The UK government and the FCA have signalled that BNPL will be brought under tighter regulatory control. While exact final rules are still being confirmed, the expected changes include:

• Mandatory affordability checks: BNPL providers will need to assess customers’ ability to repay before approving transactions, similar to traditional credit checks.
• Clearer communication: BNPL agreements will have to spell out key terms, including repayment dates, fees and the impact of missed payments, in plain language.
• Equal complaint rights: Customers will gain the same rights to escalate disputes via the Financial Ombudsman Service as they would with other credit agreements.
• More robust oversight: Providers will need FCA authorisation, which means retailers partnering with these services must ensure they’re working with compliant, regulated firms.
  
  

What does this mean for retailers?

Retailers offering BNPL at checkout, whether online or in-store, will need to be aware of the shift. While the compliance burden mainly falls on the finance providers themselves, there are still key areas retailers should prepare for:

1. Choosing the right BNPL partners
   Not all BNPL providers will be equally prepared for the new regulatory environment. Retailers should look to work with finance partners who are actively aligning with FCA expectations, investing in compliance and transparent processes. This will protect both your business and your customers.
2. Training teams and updating journeys
   Your teams should be up to speed on what BNPL involves under new rules. Expect greater need to explain how it works, the checks involved, and what happens if a customer misses a payment. Website and point-of-sale journeys may also need updating to include clearer disclosures and pre-contract information. This is something your BNPL partner should help facilitate.
3. Building trust through transparency
   While regulation may feel like an added hurdle, it also provides a chance to strengthen customer trust. Offering regulated BNPL under clear, fair terms can help reassure shoppers they’re in safe hands, encouraging them to buy with confidence.
   
   

A more stable BNPL market

Ultimately, the new regulations aim to make BNPL a safer, more sustainable option for shoppers - which is good news for retailers. A well-regulated market means less risk of customers getting into difficulty, fewer complaints, and more loyal repeat business.

At Novuna Consumer Finance, we’re committed to staying ahead of regulatory developments. Our BNPL offering is fully regulated, and we carry out robust affordability checks on every customer as standard. Responsible lending is built into the heart of our solutions, giving retailers peace of mind that they’re offering a customer-friendly, FCA-compliant way to pay.

As the market evolves, retailers who partner with providers like Novuna consumer Finance who are already aligned with upcoming regulation will be best placed to offer customers both confidence and clarity at checkout.

Want to find out how Novuna can support your retail business with BNPL that’s ready for the new rules? Explore our retail finance solutions or get in touch to speak to one of our experts.