Buy Now, Pay Later Is Regulated Now, but Your Plan Might Not Be

You will see the button at almost every checkout this holiday season: split the cost, pay later, no interest. What sits behind that button changed in 2026, but not in the same way everywhere. In the UK, buy now, pay later is now a regulated product. In the US, there is no new federal rule, and New York has proposed rules that are not yet final. If you read a headline that says BNPL is regulated now, check which country it is about before you assume it covers you.

The UK: what changed on 15 July 2026

The new UK rules cover the interest free kind of BNPL, which regulators call Deferred Payment Credit, or DPC: an interest free form of credit, repayable in 12 or fewer instalments over 12 months or less (FCA consumer page, updated 6 August 2026). Interest bearing BNPL-style credit is already regulated separately. The Financial Conduct Authority (FCA) started regulating DPC on 15 July 2026, and the final rules were published as Policy Statement PS26/1 on 11 February 2026 (FCA consumer page, updated 6 August 2026; FCA, February 2026).

The reason was scale. About 10.9 million UK adults, around 20 percent of UK consumers, used DPC in the 12 months to May 2024, and lending grew from 0.06 billion pounds in 2017 to over 13 billion pounds in 2024 (FCA PS26/1, February 2026).

For new third party plans, lenders must check whether you can afford to repay before you take out the agreement, and give you key information upfront: the amount, the repayment dates, each repayment amount, any late fee, and your rights. If you miss a repayment, the lender must contact you, explain what it means, and support you if you are struggling. Unhappy with the lender’s response? You can complain to the Financial Ombudsman Service. And if something goes wrong with what you bought, you may be able to get a refund from the lender under Section 75 of the Consumer Credit Act, the same protection you would have with a credit card (FCA consumer page, updated 6 August 2026).

Lenders must also be authorised or hold temporary permission. Registration for temporary permission has closed, and listed lenders, including Clearpay, must follow the same rules for agreements from 15 July 2026 (FCA consumer page, updated 6 August 2026). Check a lender on the FCA Firm Checker.

The UK: what did not change

Two carve outs are easy to miss at checkout. One: timing. Any DPC agreement taken out before 15 July 2026 stays unregulated, and the new protections never apply to it, however long it runs on (FCA consumer page, updated 6 August 2026). Two: who the lender is. DPC is regulated only where the lender and the seller are different businesses. If the shop itself lends you the money, the plan is not regulated (FCA consumer page, updated 6 August 2026). Regulation also does not remove late fees, and it does not make BNPL risk free.

The US: what changed, and what did not

At the federal level, nothing new is in force. The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule in May 2024 applying some credit card protections to certain BNPL accounts, then withdrew it in May 2025. There is no federal BNPL rule in force in 2026.

New York has gone furthest, but its rules are still a proposal. The New York BNPL Act was signed on 9 May 2025, and on 23 February 2026 the New York Department of Financial Services (NYDFS) published proposed rules (NYDFS announcement, 23 February 2026). The proposal would license BNPL lenders, including platforms and firms that buy BNPL loans, and require clear disclosures, a dispute process, and data privacy protections. It would generally cap late fees at 8 dollars unless the department approves more, bar prepayment fees, and apply New York’s 16 percent usury cap to interest bearing BNPL loans.

But a proposal is not a law in force: the draft would take effect 180 days after a notice of adoption is published, following public comment. A New York shopper in November 2026 does not yet have these protections, and shoppers elsewhere should not assume they apply. There is no single US-wide BNPL rule in force.

The US numbers explain why this matters at holiday time. About 16 percent of US adults used BNPL in 2025, and 26 percent of BNPL users paid late at least once (Federal Reserve, Economic Well-Being of U.S. Households in 2025, May 2026). For the 2026 holidays, 38 percent of holiday spenders plan to use BNPL, and of those, 38 percent expect they will not pay in full and on time, against 25 percent of credit card users (NerdWallet 2026 Holiday Spending Report, updated 13 October 2026; Harris Poll survey of 2,060 US adults, 8 to 10 September 2026).

What changed and what did not change, side by side

UK, changed: interest free third party plans opened on or after 15 July 2026 are regulated, with affordability checks, upfront information, support in difficulty, Ombudsman complaints, and Section 75 refunds.

UK, did not change: plans from before 15 July 2026 stay unregulated, same-business lending stays unregulated, and late fees still exist.

US, changed: nothing federally, and New York has published a detailed proposal that is not yet final.

US, did not change: no federal BNPL rule is in force, and shoppers outside New York cannot rely on this proposal.

Practical tips for holiday shoppers using BNPL

Regulation helps, but the best protection is still how you use the product. These tips are split by jurisdiction, because the rules are different.

If you shop in the UK, check the lender on the FCA Firm Checker before you take out a new plan. Authorised or temporarily permitted lenders mean the new rules apply. Check the start date too: a plan from before 15 July 2026 has no new protections. Check who the lender is: a plan from the shop itself is not covered. For faulty or missing goods on covered plans, use the Section 75 route, and keep your order confirmation.

If you shop in the US, do not assume any federal BNPL protection exists. Read the late fee and payment schedule before you confirm, because the New York proposal to cap late fees at 8 dollars is not yet in force. Ask whether on-time payments are reported to credit bureaus: many BNPL lenders still do not report them, so paying on time may not build your credit history (Federal Reserve analysis, August 2026). New York readers should follow the NYDFS proposal, but not rely on it yet.

Wherever you shop, count every open plan before you add one. Line up due dates with your paydays, and pay from an account that will hold enough money: about 11 percent of BNPL users had a payment trigger an overdraft or insufficient funds fee (Federal Reserve, Economic Well-Being of U.S. Households in 2025, May 2026). Screenshot the terms at checkout. And if you already doubt you can pay every instalment on time, do not add the plan.

The bottom line

UK shoppers got a real safety net for new third party plans, with two clear gaps for older plans and same-business lending. US shoppers got a serious proposal in New York and nothing new federally. Either way, regulation does not turn BNPL into free money. The question before checkout is the same in both countries: can every instalment be paid on time, from money you will actually have?

This article is general information only, not legal or personal financial advice. Rules change, so check the FCA or NYDFS site for the latest position before you rely on it.

Sources

• FCA, “Buy Now Pay Later” consumer page, first published 11 February 2026, last updated 6 August 2026.
• FCA, PS26/1, “Regulation of Deferred Payment Credit (unregulated Buy Now Pay Later): Feedback to CP25/23”, February 2026.
• New York Department of Financial Services, “Governor Hochul announces new nation-leading regulation to establish comprehensive consumer protections for Buy Now, Pay Later loans”, 23 February 2026. Note: this is a proposed regulation, not a final rule in force.
• NerdWallet, “2026 Holiday Spending Report”, updated 13 October 2026. Survey conducted online by The Harris Poll among 2,060 US adults, 8 to 10 September 2026.
• Federal Reserve, “Economic Well-Being of U.S. Households in 2025”, May 2026, based on the Survey of Household Economics and Decisionmaking.
• Federal Reserve, Consumer and Community Context analysis of buy now, pay later lending, August 2026.