Buy Now Pay Later : issues and remedies

The consumer credit directive under discussion at the EU level should make BNPL a safe credit for all

Authors: Aoife Monaghan and Olivier Jérusalmy

February 2022 - Financial Inclusion Europe

Extract of the Introduction

“Buy now, Pay later” has been acclaimed by its providers as a safer alternative for consumers than that of more traditional forms of credit. They boast more transparency, lower fees, low-interest or interest-free products, and convenience for consumers. This product allows customers to purchase goods or services from merchants by paying the lender in a series of instalments. However, it has become the view of many in the consumer protection field that BNPL providers exploit regulatory gaps to facilitate dangerous lending practices. BNPL is a form of credit, and with all credit comes risk. The regulatory requirements that have been imposed on traditional credit products for the protection of consumers have not applied to BNPL products, which generally operate without such constraints.