UK buy-now-pay-later enters FCA regulation, with affordability checks and Section 75 at checkout

From 15 July 2026 the FCA began regulating Deferred Payment Credit, bringing Klarna, Clearpay, PayPal and other buy-now-pay-later providers into the authorisation perimeter or the temporary permissions regime. New agreements from that date require proportionate affordability checks — including on purchases below £50 — clear pre-contract information on instalment timing and missed-payment consequences, prompt forbearance when payments are missed, Financial Ombudsman Service access, and Section 75 joint liability on eligible purchases between £100 and £30,000.

Existing agreements keep the old protections. The FCA sized the market at over £13bn of transaction value in 2024, up from £60m in 2017, with 10.9 million UK adults using BNPL in the year to May 2024.

BNPL is now an accepted method at UK checkout on regulated terms, which changes it on both sides of the acceptance equation. Providers absorb affordability, disclosure and Section 75 liability costs that will show up in merchant pricing or in approval rates; merchants who added BNPL for conversion may see fewer shoppers approved and more steps at checkout.

It is also the first major European market to regulate the method outright, making it the template other regulators will read.

Whether UK BNPL approval rates and merchant conversion visibly fall over the first full quarter, and whether providers reprice merchant fees to cover Section 75 exposure.

• which.co.uk
• FCA — PS26/1 Regulation of Deferred Payment Credit