BNPL Regulation Has Arrived. Is This The End Of An Era?

Over the last few years, Buy Now Pay Later (BNPL) has arisen from the heap of novel digital finance innovations as a standout star. With more than one in five Americans reporting using a BNPL payment plan in the previous year and an anticipated $1 trillion in gross BNPL transactions projected as soon as 2025, fintech upstarts and traditional banks alike have gone to great lengths to offer BNPL services.

For the first time, though, it looks as if all that is about to change. Since the U.S. Consumer Financial Protection Bureau announced its first-ever inquiry into BNPL services, the future is beginning to look much less bright for fintechs that have bet all on the popular payment option, with even major players such as Klarna and Afterpay fearing a downturn.

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While we are still indisputably in unknown territory, financial experts agree that heightened regulation may not be the beginning of the end for BNPL. Indeed, stricter regulatory practices may provide significant benefits not only to customers but also to lenders.

Indeed, major BNPL players have responded to this news with open arms. “We believe proportionate regulation is a good thing and set the standard by providing consumers with an interest-free, fair, and sustainable alternative to credit cards,” Klarna said in a representative communication regarding the imminent increase in oversight.