FCA to Regulate ‘Buy Now Pay Later’ in UK

Thursday, April 29th, 2021

The Financial Conduct Authority (FCA), the financial regulator in the UK, aims to regulate the Buy Now Pay Later (BNPL) payment method. If you’re interested in why the FCA has decided to regulate the sector and who can help you with the right merchant-processing services for your business, you’re at the right place. 

FCA Plans to Regulate ‘Buy Now Pay Later’

Think of BNPL as a type of credit offered at the online POS to allow for buying products and paying for them later. BNPL is increasingly becoming more popular in many places, and this trend is vividly expressed now when COVID-19 has created a special situation where people are searching for alternative ways to pay for purchases. 

BNPL comes with several advantages. More particularly, people can manage their finances. On the other hand, this method also has a darker side that consumers should know. That’s the reason why the FCA wants to bring BNPL agreements into regulation.

The volume of transactions associated with BNPL products was 3 times more in 2020 as COVID-19 made online shopping rise. However, not all consumers are well aware of the BNPL agreements they’re entering into, which results in an increased risk that consumers could end up with issues caused by these agreements.

BNPL in the UK

As of February 2021, UK households had nearly £250 billion of outstanding credit debt. More than 42.5 million people used consumer credit in 2019. 5 million people in the UK used BNPL services in 2020, which resulted in total sales of £2.7bn. 

COVID-19 created an unprecedented reality where BNPL and other payment methods gained traction among consumers. As for businesses, they got faced with an unprecedented reality as well, and the need for exceptional merchant services grew throughout the country. If you’re among these business owners, consider working with a reputable payment-comparison specialist like BestPaymentProviders.co.uk.

Best Payment Providers UK is an expert comparison company in the UK that can help you with fast and hassle-free access to the most advanced, secure, and cheapest merchant-processing services in the country. No matter you need help with Buy Now Pay Later or any other payment service, BestPaymentProviders.co.uk is the shoulder to rely on. 

According to the UK financial regulator, BNPL credit deals that online retailers offer via fintechs such as PayPal and Klarna must be regulated ‘as a matter of urgency’ since there’s potential for consumer harm.

So, BNPL is growing in its popularity. The Financial Conduct Authority has decided to regulate interest-free BNPL credit agreements so that consumers can avoid any potential harm.