Buy Now, Pay Later

How Buy Now, Pay Later works

BNPL, sometimes called deferred payment credit, lets you take goods now and pay in instalments — for example three or four payments spread over a few weeks or months. Many arrangements charge no interest provided you pay on time. It is usually offered at the checkout by providers separate from the retailer.

Because it is quick and often interest-free, it is easy to take on several arrangements at once. Each is still a credit agreement, so it is worth keeping track of what you owe across different providers.

The new FCA rules from July 2026

From 15 July 2026 the FCA began regulating deferred payment credit provided by a third-party lender. Providers now need to be authorised (or to be operating under a temporary permissions regime) to offer it. Agreements entered into before that date remain unregulated. You can check whether a provider is authorised before you use it.

• Lenders must check that borrowing is affordable before you take out an agreement
• You must be given clear information up front, including repayment dates and any late fees
• If you miss a payment, the lender must contact you and offer support
• You can complain to the Financial Ombudsman Service if something goes wrong

Protections and their limits

Regulation brings BNPL closer to other forms of credit, but do not assume every protection applies automatically. Whether purchase protection such as Section 75 applies depends on how the specific agreement is structured, and an interest-free instalment plan provided directly by a retailer may sit outside these rules. Check the terms for each purchase rather than assuming they are all the same.

Using BNPL carefully

Treat BNPL as the borrowing it is. Only commit to payments you know you can meet, keep a note of when each instalment is due, and be cautious about spreading many small purchases across several providers. Missing payments can lead to charges, referral to debt collection and, under the new rules, may be reported to credit reference agencies.