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• From July 15 2026, many third-party Buy Now Pay Later (BNPL) products will fall under FCA regulation for the first time. For lenders, this means providing clearer pre-contract information, carrying out affordability and credit checks, supporting customers in or approaching financial difficulty, and handling complaints in line with the FCA’s rules.
• Merchants remain closely involved in how BNPL is presented to customers, and financial promotions are one of the biggest areas of exposure. Everyday retail copy can qualify as a financial promotion. Under the incoming rules, content of this kind will often need to be approved or provided by an appropriately authorised firm, and must be clear, fair and not misleading.
• Businesses that act early will have time to speak to providers, test checkout changes, update marketing, brief internal teams and avoid last-minute disruption.

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Over recent years, Buy Now, Pay Later credit (BNPL) has moved from a relatively new checkout option to a firmly embedded part of the customer journey. For customers, spreading the cost interest-free makes checkout feel more flexible; and for merchants, it can help improve conversion, increase basket value and support customers to complete a purchase with confidence. But the regulatory position is set to change, and if your checkout includes a BNPL option, you have less than two months to act.

From July 15 2026, many third-party BNPL products will fall under FCA regulation for the first time, and while merchants may not be the main regulated party, these changes impact them, too. How you present BNPL to customers, what your third-party provider does next, and how your checkout journey works could all be affected.

What’s changing?

Buy Now, Pay Later, or Deferred Payment Credit (DPC) as the FCA now refers to it, is currently offered through structures that sit outside FCA regulation where certain conditions are met. From July 15, many in-scope third-party DPC products will need to meet new regulatory standards from the July 2026 deadline.

For lenders, this means providing clearer pre-contract information, carrying out affordability and credit checks, supporting customers in or approaching financial difficulty, and handling complaints in line with the FCA’s rules. Customers will also gain access to the Financial Ombudsman Service for eligible complaints about the DPC product, its promotion or the lender.

The Temporary Permissions Regime gives some providers a limited window, from May 15 to July 1 2026, to tell the FCA they intend to seek authorisation. If a provider is not already FCA-authorised and misses that window, it may not be able to continue offering BNPL once the new rules take effect. Even where a provider is already FCA-authorised, merchants should still check whether it has, or expects to obtain, the relevant FCA permission for the new regime and what practical changes are expected.

Merchants should not assume the necessary steps are already under way. Now is the time to ask what route their provider is taking, whether any service changes are expected, and what this means for the checkout journey.

Why this matters for merchants

Although the main compliance obligations sit with lenders, merchants remain closely involved in how BNPL is presented to customers, and financial promotions are one of the biggest areas of exposure.

Everyday retail copy can qualify as a financial promotion. Consider how often phrases like ‘pay in three interest-free instalments’, ‘spread the cost’ or ‘pay £30 today and the rest later’ appear across your channels. These phrases actively encourage the use of a credit product.

Under the incoming rules, content of this kind will often need to be approved or provided by an appropriately authorised firm, and must be clear, fair and not misleading.

Merchants should understand the distinction between neutral information and an active promotion. A simple list of available payment methods is likely to carry lower risk, while messaging that highlights the benefits of credit, compares finance options or positions one lender as the recommended choice will need more careful review before it goes live.

Affordability checks can require additional customer information, such as date of birth or address confirmation, and may create a brief pause while the lender makes a decision. Even where that decision sits with the lender, merchants need to make sure their systems can support the process smoothly, so customers understand what is happening and are not met with unnecessary friction at the point of purchase.

What to review before July

As well as a checkout issue, BNPL touches product pages, email campaigns, social posts, FAQs, complaint processes, refund terms, and in-store signage. Here’s where to focus:

• Talk to your BNPL provider: Ask if they intend to continue offering DPC after July 15 2026, if they are already FCA-authorised, if they need additional permissions, and if they have entered (or plan to enter) the Temporary Permissions Regime.
• Understand what will change commercially: Providers may update contracts, fees, data flows, complaints processes or checkout integrations as they prepare. You need to know what is changing, when, and what is expected from your side.
• Audit your customer-facing content: Review every place BNPL is mentioned: product pages, checkout copy, banners, FAQs, paid ads, email campaigns, social posts, app notifications and in-store signage. Any content referencing BNPL should be accurate, balanced and consistent with your provider’s approved wording.
• Brief your customer-facing teams: Customers will often contact the seller first about a BNPL transaction, failed payment or financial difficulty. Staff need to know what they can handle, when to refer to the lender, and how to avoid giving incorrect information about a credit agreement.
• Think commercially, not just legally: Additional checkout steps may affect conversion rates. Provider fees or merchant terms may change as lenders absorb new compliance costs. Clearer disclosures and stronger protections may also increase customer confidence in BNPL as a payment option, which could work in your favour.

Is there another route?

Some retailers may consider offering instalment credit directly, rather than via a third party. Merchant-provided credit can remain outside the new DPC regime where the seller provides credit for its own goods or services, with no interest or charges, repayable in no more than 12 instalments within 12 months.

This can suit certain business models, but it is not a shortcut, and you would need suitable credit agreements, compliant financial promotions, clear internal processes and a proper understanding of credit risk. For most businesses, staying with a third-party provider is the simpler path, but it’s worth understanding the alternative before the deadline forces a rushed decision.

A chance to improve

Regulation can often feel like friction, but this change gives merchants a genuine opportunity to make the BNPL experience clearer, fairer and more reassuring for customers.

Businesses that act early will have time to speak to providers, test checkout changes, update marketing, brief internal teams and avoid last-minute disruption. Those that wait may face higher costs, clunky customer journeys, outdated messaging or a rushed search for a new provider. For retailers, the opportunity is to get ahead of the deadline and build a BNPL journey that feels clearer and easier for customers to trust.

John Pauley is financial services regulation partner at law firm Harper James.

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