BNPL regulation is here. Do you know where your business sits?

What firms should check as Deferred Payment Credit enters FCA regulation, BNPL regulation is no longer a future issue.

BNPL regulation is no longer a future issue.

From 15 July 2026, Deferred Payment Credit enters FCA regulation where it is in scope.

Deferred Payment Credit, or DPC, is the term used in the FCA’s regulatory materials for the type of Buy Now Pay Later activity being brought into regulation. BNPL is the more familiar market term, but for the purposes of this article, the two terms refer to the same area of regulation.

So, what does that mean specifically to you and your business, and what do you need to have in place?

Well, for some businesses, it creates direct authorisation or temporary permission questions, and for others, the impact may sit more directly in their customer journey.

Understanding the key differences between these BNPL journeys and where you and your business sit can help you ensure you’re ready for the upcoming changes.

What changes on 15 July?

The FCA has confirmed that Deferred Payment Credit, often referred to as Buy Now Pay Later, will come into regulation on 15 July 2026.

From regulation day, DPC lenders entering into in-scope agreements will need to be authorised for the relevant consumer credit activities or have temporary permission under the DPC Temporary Permissions Regime.

The FCA has also confirmed that DPC agreements entered into before regulation day will remain exempt, and that the Government has decided broking of DPC agreements will be exempt from regulation.

That is why role matters.

A lender providing DPC and a retailer offering BNPL at checkout are not automatically in the same regulatory position. But that does not mean retailers should ignore the change.

For lenders and providers, the regulatory impact is direct. Firms may need to consider authorisation, temporary permission, creditworthiness assessments, pre-contract information, customer communications, complaints, governance, reporting and ongoing compliance. Temporary permission may allow eligible firms to continue operating after regulation day while the FCA considers their application for full permissions.

Temporary permission is not the end of the journey. It is a bridge.

Firms still need an operating model that works under FCA rules. For lenders and providers, this is not only an authorisation exercise. Regulation may also bring credit risk strategy, creditworthiness, complaints handling, data reporting and oversight of retail partner networks into much sharper focus.

Where retailers or merchants are promoting DPC products, lenders and providers may also need to consider how financial promotions are reviewed, approved and monitored across that network.

That means looking beyond the notification process and considering how the business will evidence compliance day to day.

Questions may include:

• Are the right permissions in place?

• Has the firm entered the Temporary Permissions Regime where required and eligible?

• Are creditworthiness processes ready?

• Are customer information requirements built into the journey?

• How will complaints be handled?

• What product sales data needs to be reported?

• How will governance and oversight work after regulation day?

• How will retailer or merchant financial promotions be reviewed and controlled?

• How will credit risk strategy need to adapt under the regulated regime?

Looking at your BNPL from your customers’ perspective

A customer’s journey starts the moment they visit your website or step into one of your stores. That journey continues when they browse through your product pages, go to the checkout, open one of your emails, see one of your paid social adverts, your in-store signage, or your point-of-sale screens.

That’s why, even where the lender is the regulated firm, retailers should understand how finance is presented and how the customer moves through that journey.

This is also where the broker point matters. The regulatory impact for brokers and retailers may not be about entering temporary permission, but it may still be about financial promotions, the customer journey, provider relationships and what happens if the finance journey changes.

If creditworthiness assessments or provider appetite affect acceptance rates, firms may also need to consider whether their wider finance proposition remains suitable. For some, that could include reviewing whether additional permissions are needed to introduce or offer other finance products, including interest-bearing credit.

Practical questions include:

• What does the customer see at checkout?

• Is the finance option explained clearly?

• Who approves the wording?

• Are financial promotions controlled where relevant?

• How does the handoff to the lender work?

• What happens if a customer is declined?

• Are alternative finance options available, and do the firm’s permissions support them?

• How are complaints routed?

• Who owns the provider relationship internally?

• What information does the retailer receive from the provider?

• What does the business do if the journey changes after regulation

The important thing to understand is not that every responsibility sits with the retailer. It does not. The key take out is that retailers should understand the finance journey they are putting in front of customers.

Scale changes the conversation: BNPL has grown far beyond a small payment feature

The FCA has said Deferred Payment Credit lending grew from £0.06bn in 2017 to more than £13bn in 2024. That scale changes the conversation. BNPL is no longer just a checkout convenience. It is part of customer decision-making, lender assessment, repayment behaviour, complaints handling, regulatory reporting and commercial performance.

For firms involved in BNPL, the question is no longer only whether the payment option is live. It is whether the journey is understood, governed and evidenced. Customer understanding and creditworthiness are major parts of the regulatory change.

For lenders and providers, this is a direct operational and regulatory issue. For retailers, it may also affect the customer journey. If a customer needs more information before entering an agreement, the checkout journey may need to adapt. If creditworthiness assessments affect acceptance rates, retailers may need to understand what happens when customers are declined or offered a different route.

That does not mean retailers should assume conversion will fall or that every journey will change in the same way. But they should ask themselves several important questions.

• Does the customer journey still make sense?

• What happens if the finance route becomes slower, more selective, or more information-heavy?

• Are alternative payment options clear?

• Is the customer left confused at checkout?

• Who monitors what is happening?

Provider readiness matters

Retailers relying on BNPL providers should understand how those providers are preparing for regulation. That does not mean retailers need to manage the provider’s regulatory programme. But it does mean they should have informed conversations.

The scale of the market also means firms should not assume every provider is in the same position. Retailers should check the current status of their provider relationships and understand what, if anything, needs to change before and after regulation day.

Is the provider authorised or entering the Temporary Permissions Regime where required?

• Will checkout wording change?

• Will customer information requirements change?

• Will approval or decline journeys change?

• Will complaint routes change?

• Will the retailer receive different data or management information?

• Will contracts, website copy or promotional assets need review?

• Will financial promotions need to be reapproved or monitored differently?

• Will decline rates or acceptance criteria change?

• If more customers are declined, what alternative journey will they see?

The provider relationship should not be treated as a black box. If finance is part of the customer journey, retailers should understand how that journey will operate after regulation day.

Data and oversight

BNPL regulation also brings a stronger focus on data.

The FCA has said that fully authorised DPC firms will need to provide product sales data to support supervision of the market and customer outcomes. That means BNPL is becoming more visible, more measurable, and more closely connected to customer outcomes.

For retailers, useful questions may include:

• Who uses BNPL?

• Where does the customer drop out?

• What happens after a decline?

• How often do finance-related complaints arise?

• Are issues linked to a product, channel or provider?

• Is the finance journey reviewed regularly?

• How is provider performance assessed?

Data should not just sit with the lender or provider. Retailers should think about what information they need to manage the customer journey responsibly and commercially.

A valuable opportunity for high-value sectors to review their existing sales journey

BNPL regulation is often discussed in the context of online fashion or e-commerce. But the wider point-of-sale finance issue is relevant to many higher-value sectors. Dentistry, jewellery, optical, furniture, bathrooms, home improvement and other sectors may all use finance as part of the sales journey.

BNPL may be one option. Retail finance, instalment credit, patient finance or other payment plans may also be involved. The same practical questions apply.

• How is finance introduced?

• What is the customer told?

• Who approves the wording?

• What is recorded?

• How does the lender handoff work?

• What happens if something goes wrong?

• Are permissions still suitable if the business wants to offer or introduce wider finance options?

As regulation begins, firms should consider what role they play in the DPC or wider finance journey

• Are they a lender, provider, broker, retailer, introducer, or partner?

• Do authorisation or temporary permission issues apply?

• What does the customer see before applying?

• Who approves customer communications?

• How are financial promotions reviewed?

• How are complaints handled and routed?

• How are declined customers supported?

• What data or management information is available?

• How are provider relationships governed, and what evidence is retained?

• Do current permissions support the finance products the business wants to offer or introduce?

How PPL can support

15 July is an important date, but it’s not the whole story. The firms in the strongest position will be those that understand where they sit in the BNPL journey, what customers see, who owns each step and what evidence exists to support the process.

Product Partnerships Ltd supports firms with BNPL and consumer credit compliance, including Deferred Payment Credit readiness, permissions, Appointed Representative and Direct Authorisation routes where relevant, financial promotions review, complaints management, customer journey review, point-of-sale finance systems and ongoing compliance support.

For lenders and providers, that may mean support with authorisation, governance, complaints, reporting, credit risk strategy, retailer network oversight and operating model readiness.

For brokers, retailers and merchants, it may mean reviewing checkout journeys, customer communications, provider oversight, financial promotions, complaint routes, decline journeys and whether wider finance permissions remain suitable.

For higher-value retail sectors, it may mean looking more broadly at how finance is introduced and evidenced at the point of sale.

If you’d like to find out more, give us a call to chat through your next steps.