The landscape is changing for BNPL fintechs

The Consumer Credit Directive (EU DCC 2023/2225 of 18 October 2023) repeals and replaces the current directive of 2008 (2008/48/EC), and as of 20 November 2026, the Buy Now Pay Later (BNPL) product will now be considered consumer credit. This change may entail alterations in the customer journey and increased costs. Let’s delve into the new rules of the game with this update of our initial article from 27 April 2023.

Definition and stakeholders of BNPL in France

The term ‘Buy Now Pay Later’ (BNPL) refers to a short-term financing offer allowing purchases to be made and paid for at a later date. In France, this market includes French fintechs Alma, Pledg, Younited, international players such as Paypal, Klarna, Scalapay, and Hokodo, as well as banking group subsidiaries Django (La Banque Postale), which recently acquired Joe, Floa (BNP Paribas), Oney (BPCE), Franfinance (Société Générale), Cofidis (Crédit Mutuel), Sofinco (Crédit Agricole), and Cetelem (BNP Paribas).

The Directive applies to credit agreements, which it newly defines, concluded between a lender (being a natural or legal person granting credit in the course of their professional activity) and a consumer, being a natural person acting for purposes outside their trade, business, or profession.
Furthermore, it mandates the assessment of consumer solvency, which becomes mandatory. Hence, the lender will need to meticulously assess the consumer’s solvency to prevent overindebtedness.

How does it work now?

BNPL involves a contract, a buyer (the consumer), a lender (a fintech or financial entity), and a merchant. Typically structured as a very short-term loan process, this payment facilitation falls outside consumer credit regulation as long as it does not exceed 90 days.
Beyond this, consumer credit obligations apply, such as the usury rate, disclosure requirements, and customer solvency checks.

Under what circumstances will BNPL be exempt from the EU DCC?

In 2026, with the introduction of the new EU DCC, BNPL products must meet the following conditions to not be classified as consumer credit:

• Offered to a consumer by a goods provider or service provider without the involvement of a third party offering credit. In other words, to be exempt from the new EU DCC, sellers must themselves offer these BNPL products and can no longer rely on third-party BNPL providers.

• Not include interest or other charges in the purchase price. Deferred payment must be entirely free. “Negligible fees” will no longer be applicable. In case of late payment, only limited fees compliant with national legislation may be applied.

• Repaid within 50 days from the provision of goods or services, or within 14 days if BNPL is offered by a “major” online commerce provider.

When will the EU DCC apply to BNPL?

The new EU DCC neither prohibits offering BNPL products from a third party nor a BNPL product with a repayment period exceeding 50 days or 14 days if offered by a “major” provider of goods or services. However, in doing so, the BNPL product will be considered consumer credit, and goods or services providers will be considered consumer credit intermediaries.

What impacts can BNPL stakeholders anticipate?

If BNPL is considered consumer credit, BNPL stakeholders must comply with obligations related to this type of credit, such as pre-contractual information, customer due diligence, and assessment of the consumer’s repayment capacity.

While most stakeholders have already anticipated this evolution, they do not currently apply it to all processes, as any added step affects conversion.
In detail, additional information is required, and certain details regarding the BNPL transaction must be displayed:
• Cost
• Schedule
• Consumer rights
• Functioning

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