BNPL (Buy Now Pay Later) is a payment model where the buyer receives the product immediately and pays for it in installments over several weeks or months. Klarna, Afterpay, Affirm, Zip are the largest services. The market grew tens of times from 2018 to 2024. Regulators have been examining this model for several years, and in 2025-2026 the rules have finally taken shape.

What Was Wrong

BNPL was not formally considered credit in most jurisdictions, allowing services to bypass requirements for rate disclosure, credit history checks, and consumer protection. This created problems:

  • Buyers accumulated many small installments, losing track of total debt.
  • Late fees were charged that were not obvious at the time of purchase.
  • Some BNPL providers did not check solvency – they accepted everyone.
  • Delinquencies were not reported to credit bureaus, so a person could have multiple failed BNPLs while maintaining a clean credit history.

What Changed in 2025-2026

EU. The Consumer Credit Directive 2 (CCD2) included BNPL under general regulation. From November 2026, BNPL providers must check solvency, disclose APR (effective interest rate), and register loans with credit bureaus. This applies to all installments above €200.

UK. The FCA issued rules in 2025. Large services must be authorized, conduct affordability checks, and inform customers about their credit burden.

USA. The CFPB made BNPL credit card-like with consumer protections: refunds upon return, transaction disputes, and reporting.

What This Means for Users

Solvency check on every purchase. Previously, you clicked pay in installments and got approval in seconds. Now it may take 1-3 minutes for verification, and some applications will be rejected if the bureau shows a poor history.

BNPL is reported to credit bureaus. A late payment negatively affects your credit history. This changes perception: BNPL is no longer an invisible loan.

APR on the receipt. Previously, the service only showed the installment amount. Now it must disclose the effective annual rate – which often turns out to be 20-30% APR after fees.

What This Means for Businesses

If your online store uses BNPL as part of checkout, verify that the provider has achieved regulatory compliance and that the new requirements (APR, checks) have not broken conversion. Conversion will likely decrease slightly: fewer approvals, more rejections. This is a normal effect of regulation.

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This material is for informational purposes only and is not financial advice. Data and service terms may change, so check primary sources before making a payment or investment decision. Mentions of third-party brands and services do not imply official partnership, support, or endorsement by VirtCardPay.
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