Is This The End of Buy Now Pay Later?
For the last few years, Buy Now Pay Later (BNPL) services such as Klarna and Clearpay have been rife throughout the UK. Personally, I am not a fan of BNPL as it encourages people to get into debt unnecessarily and for purchases that are too small to be considering.
I am a big fan of debt when used correctly and use credit cards to manage almost all of my spending (paid in full at the end of each month) as it provides me with cash flow planning. However, BNPL allows you to get into a cycle of taking on debt across a multitude of services where you can quite quickly lose track, miss payments and end up in a real pickle.
From 15 July 2026, key changes are being implemented for BNPL services which I have summarised as follows:
Affordability checks must be carried out for all lending (even if under £50)
All terms of the deal must be set out from the offset including charges, late fees, repayment dates
There will be increased usage of hard credit searches
There will be increased rejections of applications (expected to be up to 30% higher than now)
You will be able to escalate issues to the Financial Ombudsman
You will be able to access flexible payments and debt advice through the lender if facing difficulties
Section 75 coverage will now apply to purchases between £100 - £30,000 like with credit cards, this means if something goes wrong after the purchase (received a faulty good, etc.) you will be able to seek compensation easier
This generally sounds like a positive set of changes for me. However, I think it is strange that retailer-funded 0% interest BNPL systems will not be regulated in line with the above which will likely steer businesses away from third-party providers and instead to using their own systems where possible.
Ultimately, I think that these are steps in the right direction and should reduce the usage of BNPL schemes for smaller, unnecessary costs and it will revert back to being used for more acceptable purchases more akin to how other credit products are used.