How changes to ‘buy now, pay later’ rights affect you

Treasury says shoppers will get a ‘fairer deal’ as new rules for BNPL credit are introduced on Wednesday

Millions of shoppers will enjoy more rights and protections from Wednesday as new rules for "buy now, pay later" take effect in the UK. The government said it was delivering on its commitment to end the buy now, pay later "wild west". This form of credit will now be regulated by the City watchdog, the Financial Conduct Authority (FCA).

It is rare to go shopping online without being confronted with a flood of BNPL offers at the checkout. The Treasury said the new regime would deliver a "fairer deal" for shoppers. But some campaigners say that despite the new safeguards, consumers should still think carefully before succumbing to the temptation to click on the BNPL button.

I've not succumbed (yet) – what exactly is buy now, pay later, and how big is it? BNPL is a form of credit. It lets people spread payments for everything from clothes, jewellery and white goods to concert tickets, flights and hotel rooms and takeaway pizzas.

It has really taken off in the UK in recent years. The sector's value jumped from £60m in 2017 to more than £13bn in 2024, according to the FCA, and will be higher than that now. When someone uses BNPL to buy something, typically the cost is split into three or four instalments that they pay off over a few weeks or months.

If they keep up with their repayment plan, they will not pay interest or charges, making it effectively free to use. But if they miss payments, they will often be hit with late fees as well as – in some cases – a mark on their credit file. BNPL is offered by a vast array of retailers, with three brands – Klarna, Clearpay and PayPal – dominating the UK market.

The use of this type of credit rose from 14% to 25% of UK adults in only a year, according to the banking body UK Finance's latest data. Young people fuelled its rise, but more recently, the biggest growth has been among older consumers. Why is the government taking action?

Regulators, consumer bodies and others have long voiced concerns that some shoppers will end up borrowing money they cannot afford to pay back on time, thereby incurring charges, getting into debt and damaging their credit score. Organisations such as Citizens Advice have talked about how they are helping "more people than ever before" with BNPL-related problems. The biggest issue with BNPL was that, up until Wednesday, it was not regulated in the same way as other consumer credit products.

What are these new rights and protections? The shake-up gives people protections in line with other forms of credit such as a credit card or personal loan. BNPL lenders will now have to carry out an affordability check before each loan is taken out (many firms say they already run these checks).

The Treasury said this should ensure no one borrows what they cannot realistically afford to repay. Firms will need to provide clear, upfront information, including when payments will be due and what happens if you miss one. And anyone who falls into financial difficulty will be directed towards debt advice and support first, rather than being immediately handed to a debt collector.

BNPL users will benefit from section 75 protection on purchases above £100. This is the same protection long associated with credit cards, and gives people the right to claim against their BNPL provider, as well as the retailer, for qualifying purchases between £100 and £30,000 if something goes wrong. Many BNPL purchases involve amounts smaller than £100 and the credit