However, according to Naresh Aggarwal, Associate Director, Policy and Technical at the Association of Corporate Treasurers, outside of the retail sector, he hasn’t observed BNPL initiatives coming up in wider conversations on how the treasury department can support business growth and revenue.
In fact, Aggarwal comments that some BNPL offerings can “cannibalise” certain sales by offering interest-free deferred payments to customers who would normally just pay upfront for products.
Payment instalment plans have been offered by various merchants for decades, while the modern BNPL offering emerged as a convenient consumer credit product from Klarna to merchants in Sweden almost 20 years ago. Deferred payment credit can come in various forms, from paying in multiple instalments, a delay of full payment to a predetermined date, longer-term financing at zero-interest for high-ticket purchases or longer-term financing with subsidised interest, which is financing underwritten by merchants or issuers.
According to the latest Global Payments Report from Worldpay, e-commerce for global BNPL transaction values rose 130-fold from US$2.3bn in 2014 to an estimated US$300bn in 2025 or 4% of global e-commerce value. Worldpay predicts that by 2030, BNPL will account for 5% of the global e-commerce value, around US$500bn.
According to Gabriel Lucas, Director, Payments Advisory at Paris-based Redbridge Debt and Treasury Advisory, corporate treasurers generally don’t see BNPL as just another payment method, but rather as a form of consumer credit embedded into the checkout.
“That distinction matters, as it brings additional considerations beyond acceptance – including return on investment, such as additional margin vs additional cost, settlement, reconciliation and exposure to the BNPL provider,” he says.
The upcoming FCA mandate takes this same view of BNPL as more than just a payment option and makes it one that demands oversight of credit risk, regulatory alignment and consumer outcomes.
While any payment mechanism that reduces friction while interacting with customers is important, says James Leather, Director – Corporate Treasury, at Corium Treasury, as a treasurer, those options should be offered to customers “in a way that keeps things attractive to them yet doesn’t harm you as a business”.
For example, says Leather, a customer using BNPL to make several months’ worth of payments is attractive and helps a business retain a customer, but “how does that help me as a business?”
If every single customer used BNPL to complete a payment, that would “hurt my working capital,” he adds.
In addition to Klarna, the growing business has emerged largely outside the traditional banking sector, which is required to offer protections that govern traditional credit. Other players in the space include Affirm, which has just expanded into the UK, and Afterpay, known as ClearPay in the UK.
A spokesperson for Clearpay, a subsidiary of US payments platform Block, said the firm welcomes increased regulation because “it will establish a consistent operating environment and clear compliance standards for all providers”.
According to research conducted by Clearpay, nearly half of UK adults, around 48%, are more likely to use BNPL once it is regulated. The research goes on to say that 71% believe it is important for BNPL to be subject to UK financial legislation, because it will help foster trust among consumers as it becomes an everyday payment option for consumers.
When BNPL comes under the authority of the FCA in the UK this July, lenders must conduct affordability checks, provide clear information, and enable consumers to access the Financial Ombudsman Service, as consumers will gain rights under the Consumer Credit Act.
These rules in the UK apply only to third-party BNPL providers, and not usually to retailers offering their own interest-free instalment plans, such as merchant-offered credit.
For the BNPL third-party lenders, quick customer approvals must be replaced by proportionate affordability checks to ensure borrowers can meet repayments without falling into financial distress. Those affordability checks may include cross-referencing data from credit reference agencies, even for small-sum loans.
The new mandate also dictates the amount of information and education that must be presented to a customer before a BNPL agreement is signed. Core details such as repayment dates, amounts and the consequences of missed payment, must be presented in clear language and be prominent.
BNPL users will also have the right to escalate unresolved complaints to the Financial Ombudsman Service, for the first time. Under the FCA’s Consumer Duty, lenders must support customers in financial difficulty, pointing them towards free debt advice rather than defaulting to late fees.
The introduction of regulatory friction into what had been promoted as a quick, at-the-point-of-sale payment option for consumers has implications for corporates and treasurers.
Affordability checks could impact checkout conversion rates as consumer purchases are delayed or those with poor credit ratings are declined.
However, Aggarwal points to the maturity of Klarna and its experience digitising and automating credit reports and turning around a credit report and doesn’t predict huge delays in check out conversation rates due to affordability checks.
According to Dominic Lynch, co-founder at Your Treasury, a retailer looking at their cash flow with a desire to improve numbers may well examine the opportunity of partnering with a BNPL provider, especially if this credit method allows companies to acquire and retain customers who may not be able to purchase products upfront.
“These new credit solutions, which Klarna provide, allow you to offer that solution to the customer,” he says. This results in increased new customers and less customer churn, he adds.
However, for corporate treasurers, improved customer conversion needs to be balanced against risks like increased merchant fees, regulatory changes and managing partnerships with BNPL providers.
However, Lynch agrees with Aggarwal that corporate treasurers are less concerned with BNPL and the changing global regulatory landscape.
“Klarna has been around for quite a long time, and Europe has been quite progressive in these new financial instruments,” he adds. “There’s been quite a lot of improved regulation on it that’s come out,” he adds.
As of November this year, EU companies will have to comply with the second iteration of the Consumer Credit Directive 2 (CCD 2) which, while still covering traditional credit, now extends to BNPL and other micro-lending tools. Much like the FCA mandate in the UK, the CCD 2 requires a creditworthiness assessment on all loans, even those under €200.
Despite this, corporate treasurers are more interested in the use of other payment innovations, such as stablecoins and cryptocurrencies, than the growth of BNPL, says Lynch.
Lucas at Redbridge says BNPL is an example of the broader growth of embedded and contextual forms of credit, where financing is increasingly offered directly at the point of purchase, often supported by real-time decisioning.
Lucas does agree with Lynch on the link between credit and customer engagement.
“BNPL providers are not only offering financing but also building recurring relationships with consumers through repeat usage,” he says. “Over time, this creates a form of loyalty supported by transaction and repayment data. While not equivalent to traditional know your customer (KYC), this data allows providers to better understand customer behaviour and refine both risk models and commercial offers.”
However, Lucas predicts that the economics of these models are likely to come under more pressure as regulation increases and funding costs normalise. He adds that this may lead to “further consolidation and a stronger focus on sustainable profitability”.
“This also creates an opportunity for banks and more traditional consumer lenders to re-enter the space,” says Lucas. “As the market becomes more regulated, players with stronger balance sheets and risk capabilities are in a good position to compete, provided they adapt their distribution and user experience.”
More advanced organisations treat BNPL as a set of credit partnerships rather than a single payment option, says Lucas. This involves selecting providers market by market and putting in place controls around reconciliation, refunds and performance monitoring.
“Less mature approaches”, such as simply adding BNPL at checkout without adapting internal processes, can “often lead to higher costs without clear incremental value,” he says.
“This can result in duplicated payment methods, weak control over pricing and difficulty measuring true impact. It can also create operational friction in reconciliation, refunds and disputes, and in some cases, reputational risk if the credit experience is not aligned with the merchant’s brand,” he adds.
Lucas doesn’t feel that the upcoming UK regulation will materially reduce adoption, but it will bring BNPL closer to traditional consumer credit.
“Bringing BNPL within a more formal regulatory framework may reduce some of that flexibility, but it should also make the model more transparent and easier for merchants to manage. In practice, it shifts BNPL from a growth story to a sustainability story,” he adds.
Meanwhile, in anticipation of the upcoming mandate in the UK, Clearpay has been working with the FCA to ensure its products, processes and disclosures meet the requirements of the new regime.
In turn, Clearpay have been updating its merchant partners on how to prepare for the transition to a regulated environment.
“We have hosted dedicated information sessions for our merchants, presenting updates on the regulatory timeline, what the changes mean in practice, and what actions they need to take,” says the spokesperson. “We maintain an open and ongoing dialogue with our merchant partners so that we can support them with any queries as they arise.”
According to the BNPL provider, their merchant partners will need to ensure their business complies with Clearpay’s updated Merchant Marketing and Advertising Guidelines by 15th July 2026, including integration assets, frequently asked questions (FAQs) pages and any Clearpay marketing on their websites, marketing emails, social media or other communications to customers.
In addition to regulatory changes in the UK and the EU, Australia moved BNPL services within the country’s consumer lending regulatory regime, contained in the National Consumer Credit Protection Act 2009 (NCCPA) from 10th June 2025.
BNPL providers in Australia are now subject to similar requirements as other regulated credit providers under the NCCPA, including requirements to hold an Australian credit licence, have internal and external dispute resolution arrangements, permit access to hardship arrangements and comply with product disclosure requirements and responsible lending obligations, according to a spokesperson for the Australian Department of Treasury.
This means that BNPL products now fall under a Low Cost Credit Contract regime within the NCCPA, which can elect to use a modified responsible lending framework. To fall under this Low Cost Credit Contract regime, BNPL products must meet strict fee cap requirements under which a consumer cannot be charged by a provider more than AU$320 in fees or charges in the first year or AU$245 in any subsequent year.
Clearpay, known as Afterpay outside the UK, operates across multiple markets, including Australia, the United States, Canada and New Zealand, each with its own approach to regulating BNPL. The BNPL provider previously complied with changes in New Zealand and Australia last year.
Meanwhile, under the guidance of the Monetary Authority of Singapore (MAS), the Singapore FinTech Association (SFA) co-created a BNPL Code of Conduct in 2002, mandating accreditation for BNPL providers, establishing strong consumer protection, including creditworthiness safeguards, and requiring clear disclosure and fair, transparent fees.
The US presents a much more fragmented and unclear environment for BNPL. Currently, regulations covering deferred consumer credit vary by state.
In 2024, the Consumer Financial Protection Bureau’s (CFPB) interpretive rule stated that specific BNPL products must comply with parts of Regulation Z under the Truth in Lending Act ruling that BNPL lenders are credit card providers subject to consumer protection requirements for credit cards, including dispute investigations, refunds and billing statements.
Regulation Z is a federal regulation enforcing the Truth in Lending Act of 1968 (TILA), requiring lenders to clearly disclose the costs and terms of credit – such as interest rates, fees, and finance charges – to consumers.
However, by May 2025, it was announced that it was not an enforcement priority, as the regulator sought to keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen or veterans, and was contemplating taking appropriate action to rescind the rule.
The US CFPB has stated it won’t be issuing a revised BNPL rule as it doesn’t believe that BNPL lending is appropriate for credit card regulations.
Despite this complex regulatory environment, some state-level regulation exists. New York has passed BNPL oversight laws outlining product requirements. California regulates BNPL under the California Financing Law (CFL). And the Maryland Office of Financial Regulation ruled that BNPL transactions count as loans under state law, meaning providers must be licensed to offer them.
“We see this not as a challenge to be managed, but as a reflection of the growing recognition by governments worldwide that BNPL is a meaningful part of the consumer credit landscape,” says the spokesperson.
Rather than “shoehorning” BNPL into legacy credit frameworks, Clearpay promotes the policy that it requires tailored regulation that reflects the unique nature of the product, being interest-free, short-term payments with built-in spending controls, adds the spokesperson.
