Buy Now, Pay Later: An Evolving Regulatory Landscape

Investment Insights

The latest buzzword in fintech, which is increasingly catching regulators’ attention worldwide, is enticingly named Buy Now, Pay Later (BNPL). Short-term financing, BNPL enables consumers to make purchases and pay for them in installments at future dates, often interest-free. For providers, increased regulation is expected to result in a rise in compliance costs. Will it lead to increased consolidation or something entirely unexpected as the sector continues to evolve?

Key Takeaways

  • BNPL is highly popular among younger consumers, i.e., millennials and Gen Z, as they welcome the ability to delay payment for goods and access various financing options. 
  • Given the similarities between BNPL and products like credit cards, a long-standing debate over BNPL regulation is whether it should be considered and regulated as consumer credit. 
  • However, the general direction of BNPL regulations worldwide is toward increased oversight, intervention, better customer protection, and the tightening of credit assessment requirements.

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