The UK has introduced new rules for buy now, pay later (BNPL) lending, bringing it under Financial Conduct Authority regulation from Wednesday and giving shoppers protections similar to those attached to other forms of credit. The government says this ends the sector’s “wild west” era and should create a fairer deal for consumers, while campaigners still warn that people should think carefully before using it. The change matters because BNPL has become a common feature of online shopping and is increasingly used by millions of people for everyday and higher-value purchases.

Under the new regime, lenders must carry out affordability checks before each loan, provide clearer information about repayments and missed payments, and direct struggling borrowers towards debt advice before debt collection. BNPL users will also gain section 75 protection on purchases between £100 and £30,000, allowing claims against the lender as well as the retailer if something goes wrong. The sector grew from £60m in 2017 to more than £13bn in 2024, according to the FCA, while UK Finance says usage among UK adults rose from 14% to 25% in just one year. Major providers in the UK market include Klarna, Clearpay and PayPal, and missed payments can still lead to late fees and possible damage to credit files.