The UK’s Financial Conduct Authority (FCA) began supervising buy now, pay later on July 15, 2026, under the label Deferred Payment Credit (DPC). Overnight, Klarna, Clearpay, and PayPal’s Pay in 3 became regulated consumer lenders. France follows on November 20, 2026, when the EU’s revised Consumer Credit Directive, known as CCD2, takes effect. The timetables differ, but the direction is the same: installment payments are being folded into ordinary consumer credit law.
For a decade, pay-in-three and pay-in-four plans grew in a comfortable legal gray zone, neither quite a payment method nor quite a loan. That ambiguity is now closing.
A £13 billion UK market comes under supervision
The UK regime rests on policy statement PS26/1, which the FCA published on February 11, 2026. It covers a market that has exploded, from £60 million in transactions in 2017 to more than £13 billion in 2024, with some 11 million users. From July 15, every new BNPL agreement requires the lender to run a proportionate affordability check before extending credit, to give clear information up front (installment dates, amounts, and the consequences of a missed payment), and to offer access to the Financial Ombudsman Service for complaints, the same route available to credit card holders.
France brings every installment plan under credit law on November 20
In France, the governing text is Directive (EU) 2023/2225 (CCD2) of October 18, 2023, transposed by Ordinance No. 2025-880 of September 3, 2025, with an effective date of November 20, 2026. The shift in doctrine is sweeping: every installment payment plan, even one with no fees or interest, falls within the scope of consumer credit. The exemptions based on short duration or zero cost disappear. Loans under €200 and installment plans repaid within three months, previously out of scope, are now covered.
- Systematic affordability checks: before every loan, the lender must verify the borrower’s ability to repay based on actual income and expenses.
- A 14-day withdrawal right, in line with traditional consumer credit.
- A mandatory SECCI form (the Standard European Consumer Credit Information sheet) so borrowers can compare offers.
- Advertising rules: messages that play up how “easy” or “instant” credit is are banned, and marketing must be clear, fair, and not misleading.
- A higher cap on consumer credit, raised from €75,000 to €100,000.
| Rule | UK (FCA / DPC) | France and EU (CCD2) |
|---|---|---|
| Effective date | July 15, 2026 | November 20, 2026 |
| Legal basis | PS26/1 (FCA) | Ordinance 2025-880 / Directive 2023/2225 |
| Affordability check | Proportionate, mandatory | Systematic, based on actual data |
| Pre-contract information | Clear terms up front | Standardized SECCI form |
| Redress | Financial Ombudsman Service | 14-day withdrawal + standard credit law |
| Scope | Deferred Payment Credit | All installment plans, including free ones and those under €200 |
BNPL grew too big to stay unregulated
Regulators are acting now because installment payments have become a major part of e-commerce. In France, Klarna reports 7 million users, more than 57,500 partner merchants, and €6.2 billion in volume processed since it entered the market in 2021. French rival Alma posted €2.5 billion in business volume in 2025 (up 30%) and has about 23,000 merchants signed up, alongside Oney, FLOA, and PayPal. The French BNPL market is estimated at around $14.9 billion in 2026, growing at double digits a year.
Compliance costs rise, but the market gains legitimacy
For BNPL fintechs, regulation cuts both ways. It raises compliance costs (scoring engines, disclosure flows, complaint handling) and could slow approval rates at checkout, where speed was the main selling point. But it also cleans up and legitimizes a market long suspected of feeding over-indebtedness among young households. Providers already backed by licensed credit institutions (Oney, FLOA, or Klarna, which holds a banking license) have a head start over pure tech players.
For merchants, the work is operational: display the required legal notices, build the SECCI form into the checkout flow, and confirm that their provider is compliant before the November deadline.
BNPL is following the usual arc of payments innovation: a stretch of unchecked growth at the edges of the law, then normalization once volumes become systemic. After instant payments were brought under an EU regulation and stablecoins under MiCA, installment payments are losing their special status. One question remains open: once BNPL faces the same constraints as traditional credit, will it keep what set it apart, the promise of an invisible, frictionless payment?