Retailers offering Buy Now, Pay Later at checkout are being urged to review their customer journeys ahead of new rules bringing the payment method under Financial Conduct Authority regulation.
The new regime comes into force on 15 July and marks a major shift for the UK retail payments market, as BNPL lenders face stronger oversight and tougher consumer protection requirements.
The reforms are designed to ensure shoppers are given clearer information before borrowing, while lenders will also be required to carry out affordability checks.
Customers using BNPL products will gain access to the Financial Ombudsman Service, giving them a formal route to escalate complaints.
However, most retailers will remain outside the FCA’s regulatory perimeter, despite offering BNPL products to customers at checkout.
Retailers had previously feared they could be treated as regulated credit brokers simply for introducing shoppers to BNPL providers. Under the final approach, merchants will generally be able to continue offering BNPL through a merchant exemption without needing FCA authorisation.
The decision avoids a significant compliance burden for retailers at a time when many are already facing higher employment costs, fragile consumer confidence and pressure to protect conversion rates.
However, businesses are still being told not to treat the change as purely a lender issue.
Retailers should review how BNPL is referenced across websites, checkout pages, product pages and marketing materials to ensure messaging remains clear and aligned with provider requirements.
They should also work closely with BNPL partners to understand any changes to customer journeys, disclosures, approval processes and complaints handling once the new rules take effect.
Customer service teams may also need additional training so they can explain the new protections and direct shoppers to the right process if issues arise.
Although the regulatory burden will sit primarily with BNPL firms, the changes could still affect retailer performance at checkout. Stronger affordability checks and updated disclosures may influence approval rates, conversion rates and average basket values.
The reforms come as BNPL remains an important payment option for retailers, particularly in fashion, beauty, home, electronics and other categories where shoppers often spread the cost of purchases.
For merchants, the challenge will be to preserve the speed and simplicity that made BNPL popular, while ensuring customers are given the clarity and protections expected under the new regime.
Retailers that engage early with their BNPL providers and test the impact on their customer journey will be best placed to minimise disruption when the rules take effect.
The reforms are intended to improve trust in the sector and reduce the risk of shoppers taking on unaffordable debt. While retailers have avoided direct regulation, the checkout experience is still likely to change.
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