On 15 July 2026, 'buy now, pay later' finally comes under FCA regulation. If you're a business offering BNPL at the checkout, the headline is reassuring: the new rules land on the lenders, not on you. But the detail matters — including one exception that still catches plenty of businesses. Here's the full picture, based on the FCA's final rules.
What's actually changing
Interest-free credit repayable in 12 or fewer instalments within 12 months — what the legislation calls Deferred Payment Credit (DPC), and everyone else calls BNPL — has historically sat outside FCA regulation entirely. That ends on 15 July 2026, when the FCA's final rules (Policy Statement PS26/1, published February 2026) take effect.
From that date, third-party lenders offering DPC to finance purchases from a merchant are carrying on a regulated activity. They need FCA authorisation (or a temporary permission — more below), they must assess affordability on every transaction, give customers proper pre-contract information, handle complaints under FCA rules, and meet the Consumer Duty. Customers also gain Section 75 protection on qualifying purchases, and access to the Financial Ombudsman. Lending DPC without permission after regulation day is a criminal offence.
The part that matters for merchants: you stay exempt
If your business offers BNPL as a payment method — the customer picks a pay-in-three or pay-monthly option at your checkout, and a finance provider funds it — you are broking DPC. Under the final rules, merchants broking DPC remain exempt from FCA regulation. You don't need authorisation to keep offering it.
Worth knowing: this is more generous than the FCA originally proposed. Earlier consultation drafts would have required domestic premises suppliers — businesses that sell in customers' homes, like many home-improvement firms — to get authorised for DPC broking. The final rules dropped that: the merchant exemption now covers in-home sellers too. If you read guidance written before February 2026 saying otherwise, it's out of date (ours included — we've updated it).
Merchants that fund their own interest-free instalment plans directly, with no third-party lender involved, also remain outside the regime.
The exception that still catches businesses
The exemption is for businesses offering only DPC. The moment your finance offer goes beyond interest-free-within-12-months — an interest-bearing agreement, a 0%-to-the-customer deal running longer than 12 months (very common in home improvement and big-ticket retail), or introducing customers to a lender's wider credit products — you're into regulated credit broking, and you need FCA authorisation exactly as before. The new BNPL rules change nothing there.
In practice that's where most businesses trip: they think of their 10-month interest-free plan and their 36-month finance option as the same thing. The regulator doesn't. One is exempt DPC; the other is a regulated credit agreement, and introducing customers to it is regulated activity. If you offer a mix, the exemption doesn't save you — you need limited permission.
If you're a lender — or about to become one
Firms actually lending DPC without existing consumer credit permissions had a tight runway: the Temporary Permissions Regime (TPR) opened for notifications on 15 May 2026 and closed on 1 July 2026 (£280 fee, and the firm must have been carrying on DPC activity on 15 July 2025). Firms in the TPR then have six months from regulation day to apply for full authorisation. Miss the window and you must stop writing new DPC agreements on 15 July — continuing without permission is a criminal offence, though existing agreements can still be serviced. The full set of dates and figures is summarised on our key facts reference page.
What merchants should actually do before 15 July
Three practical checks. First, confirm what you really offer: list every finance option at your point of sale and check each against the DPC definition (interest-free, 12 or fewer instalments, 12 months or less). Anything outside that definition means you need authorisation — our two-minute eligibility checker walks you through it. Second, check your BNPL provider is ready: from regulation day they must be authorised or in the TPR, and they'll be pushing new mandatory customer information into your checkout and in-store journeys — expect requests from them and don't ignore them. Third, if you're planning to add proper retail finance alongside BNPL, factor the authorisation timeline into your launch plans: the FCA decides in its own time and does not commit to a date, so the businesses that sail through are the ones that prepare early.
Frequently asked questions
- Do merchants need FCA authorisation to offer buy now, pay later?
Generally no. Under the FCA's final rules taking effect 15 July 2026, merchants offering BNPL (Deferred Payment Credit) as a payment method remain exempt — the regulation lands on the third-party lenders instead. The exemption covers in-home sellers too, a change from earlier proposals. But if you also offer interest-bearing or longer-term finance, you need credit-broking authorisation as before.
- What counts as Deferred Payment Credit (DPC)?
Interest-free credit repayable in 12 or fewer instalments within 12 months or less, provided by a third-party lender to finance the purchase of goods or services. This is the product the new rules regulate from 15 July 2026. Interest-bearing agreements or anything running longer than 12 months fall outside DPC and were regulated already.
- What happens to BNPL lenders on 15 July 2026?
DPC lending becomes a regulated activity. Lenders must be FCA-authorised or registered under the Temporary Permissions Regime (notifications 15 May to 1 July 2026, £280 fee) to write new agreements. Lending without permission becomes a criminal offence, though pre-existing agreements can still be serviced. Regulated lenders must assess affordability, meet the Consumer Duty and handle complaints under FCA rules, and customers gain Section 75 and Ombudsman protections.
- I offer 0% finance over 3 years — am I exempt?
No. The DPC exemption only covers interest-free credit repayable in 12 or fewer instalments within 12 months. A 0% deal running longer than that is a regulated credit agreement, and introducing customers to it is regulated credit broking — you need FCA authorisation, typically limited permission if finance is secondary to your main business.
This article is general information to help you understand the process, and is not legal or regulatory advice. CreditLicence is a regulatory consultancy; it is not authorised or regulated by the Financial Conduct Authority, nothing it provides is regulated advice, and it is not affiliated with, endorsed by, or acting on behalf of the FCA. FCA rules can change; always check the FCA's website for the current position.