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Ecommpay has urged merchants to check whether their Buy Now, Pay Later providers meet new UK regulatory requirements as full Financial Conduct Authority supervision begins for interest-free instalment products.
Lenders offering Deferred Payment Credit must now be authorised by the FCA or registered under the Temporary Permissions Regime to continue operating legally. Although the rules apply directly to lenders rather than retailers, they will affect how BNPL products are presented and managed at checkout.
Under the new regime, lenders must carry out affordability checks on every transaction, with the depth of those checks linked to risk. Purchases under £50 are no longer exempt. Lenders must also give customers clear upfront information on payment dates, amounts and the consequences of missed payments.
New arrears rules require prompt contact with customers who miss payments, reasonable notice before enforcement action, and signposting to free debt advice. Consumers with eligible complaints about Deferred Payment Credit agreements can also take their cases to the Financial Ombudsman Service.
Ecommpay warned merchants not to assume they are insulated from the consequences of a lender failing to meet the new standards. Problems involving a BNPL option can still damage the retailer's customer experience and brand.
"BNPL has always been credit - regulation is simply catching up," said Alpa Jotangia, Head of Compliance at Ecommpay.
"And critically it isn't just a technical change for BNPL providers; it changes the checkout conversation for everyone. The reality is that consumers don't separate the lender, the payment provider and the retailer in their minds. They remember the checkout experience, the refund experience, and how they were treated when something went wrong. If a BNPL partner falls short, it's the merchant's brand that's likely to be impacted."
Merchant checks
Retailers using BNPL at checkout should verify that each provider is either FCA-authorised or registered under the temporary regime. They should also review the customer journey to assess how repayment terms are displayed, how affordability checks are handled, and what happens when a customer returns an item or falls into arrears.
Merchants should also ask lenders how they meet their regulatory duties, including disclosure, refund handling and support for vulnerable customers. Ecommpay presented those steps as practical checks for retailers reviewing their existing payment setup.
The changes mark a significant shift for a market that expanded quickly under lighter oversight. BNPL products have become a common feature of online checkout in recent years, particularly for lower-value retail purchases, and the move brings them more closely into line with other forms of consumer credit.
For lenders, the rules introduce operational demands around underwriting, disclosures and arrears management. For merchants, the concern is less about direct regulatory exposure and more about whether a provider's compliance processes introduce delays, confusion or disruption at the point of sale.
Jotangia said the sector would need to balance consumer safeguards with a simple user experience.
"The payments industry has spent years removing friction from checkout, but friction is not always failure when it comes to offering credit - sometimes it's protection," she said.
"The winners in the regulated BNPL market will be the providers that make responsible credit feel clear, intuitive and proportionate, and that's where payments expertise matters. Payments service providers like Ecommpay can help merchants ensure their payment journeys work smoothly alongside compliant BNPL offers, delivering a checkout that converts. The next phase of BNPL won't be defined by who has the most prominent button at checkout - it will be defined by trust."