Although responsibility for compliance sits primarily with BNPL lenders, retailers should still take steps to prepare for the new regime.
New rules bringing Buy Now, Pay Later (BNPL) products under Financial Conduct Authority (FCA) regulation come into force on 15 July, marking a significant change for the UK's retail payments landscape.
The reforms are designed to strengthen consumer protections through affordability checks, clearer information for borrowers, access to the Financial Ombudsman Service and stronger regulatory oversight of BNPL providers.
A positive outcome for retailers
One of the key outcomes of the legislation is that most retailers will remain outside the FCA's regulatory perimeter.
We successfully argued that retailers should not be treated as regulated credit brokers simply because they offer BNPL products at checkout. As a result, merchants can continue introducing customers to BNPL under a merchant exemption and will not generally require FCA authorisation.
This avoids the significant compliance burden that many retailers had feared during earlier consultations.
What retailers still need to do
Although responsibility for compliance sits primarily with BNPL lenders, retailers should still take steps to prepare for the new regime.
Key actions include:
- Reviewing BNPL references in websites, checkout pages and marketing materials.
- Engaging with BNPL providers to understand any changes to customer journeys and disclosures.
- Training customer service teams on the new protections and complaints processes.
- Monitoring approval rates, conversion rates and basket values following implementation.
Looking ahead
The new rules are intended to improve consumer confidence while ensuring customers are protected from unaffordable borrowing. While retailers have avoided becoming directly regulated, the changes could still affect customer behaviour and checkout performance.
Businesses that work closely with their BNPL partners and review customer-facing processes ahead of July will be best placed to minimise disruption and maintain a smooth customer experience.
