Buy now, pay later is no longer simply a checkout conversion tool. Since 15 July 2026, the Financial Conduct Authority (FCA) has regulated a defined category of interest-free BNPL: deferred payment credit (DPC) provided by a third-party lender. For UK online sellers, the immediate message is practical rather than dramatic. If a separate BNPL provider supplies the credit on your site, the lender carries the core lending obligations, but your business should still check who it is working with, how the option is described, and where customer problems are sent.
That distinction matters. A merchant does not automatically become FCA-authorised merely because it displays a third-party BNPL option at checkout: the FCA says broking of DPC agreements is exempt from regulation. But an online retailer can still create serious customer harm, commercial risk and avoidable disputes if it promotes an unavailable product, gives misleading repayment information, mishandles refunds, or leaves a struggling customer between the retailer and lender. The strongest response is a short, documented operational review rather than a generic claim that every seller is now “BNPL regulated”.
This article sets out what has changed, what online businesses should check now and how to build a sensible escalation process without overstating the legal position.
What changed on 15 July 2026?
From 15 July 2026, DPC agreements offered by third-party lenders became regulated credit agreements. DPC is the FCA’s term for interest-free credit used to finance goods or services and repaid in 12 or fewer instalments over 12 months or less. In the common online retail model, the customer buys from a merchant while a separate business provides the credit. That is the model now brought into the FCA regime. The FCA’s consumer BNPL guidance confirms both the 15 July start date and the basic definition. ([fca.org.uk](https://www.fca.org.uk/consumers/buy-now-pay-later))
The change gives customers using newly entered third-party DPC agreements protections that were not previously available. Lenders must carry out proportionate affordability assessments, provide pre-contract information, support customers in financial difficulty and handle complaints that can ultimately be referred to the Financial Ombudsman Service. The FCA also says that customers may be able to seek a refund from the lender when something goes wrong with goods bought using DPC, because Section 75 Consumer Credit Act protection is available. The Government’s 15 July announcement explains the policy aim: placing key protections around BNPL borrowing while retaining access for customers who can use it responsibly. ([gov.uk](https://www.gov.uk/government/news/government-delivers-fairer-deal-for-shoppers-as-buy-now-pay-later-rules-come-into-force?utm_source=openai))
Crucially, the new regime is not retrospective. DPC agreements entered into before 15 July 2026 remain outside this new regulatory treatment. A retailer should therefore avoid telling customers that every historic BNPL purchase has acquired the same protections overnight. Customer service teams need a clear date check in their workflow.
The boundary online sellers must understand
Third-party BNPL: the lender is the regulated firm
The new rules apply where the lender and supplier are different people and there is an arrangement between the merchant and lender through which the lender becomes the legal supplier of the goods or services to the customer. In straightforward terms, if your checkout offers a separate lender’s “pay in three” or “pay later” product, assume the arrangement needs close scrutiny as third-party DPC unless your provider has confirmed otherwise.
For these agreements, it is the lender that must be FCA-authorised for the relevant consumer-credit activity or have a valid temporary permission. The FCA has stated that lenders without the necessary permission cannot enter into new DPC agreements after 15 July 2026, although they can continue servicing agreements made before that date. ([fca.org.uk](https://www.fca.org.uk/firms/regulating-buy-now-pay-later?utm_source=openai))
For most ordinary ecommerce merchants, simply offering that third-party checkout option does not mean the merchant must obtain consumer-credit permission. The FCA expressly says DPC broking is exempt. That does not remove the need for good governance. It means the sensible question is not “How do we become the lender’s compliance department?” It is “How do we make sure our checkout, supplier relationship and support routes work properly with a regulated lender?”
Merchant-own credit: do not make overbroad claims
The position is different where the supplier provides its own deferred-payment credit directly to its customer. The FCA has said that supplier-provided, or “merchant own”, DPC remains exempt from this new DPC regulation. The FCA’s consumer guidance is equally clear: where the business selling the item is also providing the DPC, it is not regulated under this new framework. ([fca.org.uk](https://www.fca.org.uk/news/press-releases/new-protections-confirmed-buy-now-pay-later-borrowers?utm_source=openai))
That is not a licence to conclude that every in-house instalment arrangement is unregulated, risk-free or exempt from every consumer-credit and consumer-protection requirement. The structure, term, charges, payment consequences, customer type and other facts can matter. Nor should a retailer use “merchant own credit is exempt” as a blanket marketing reassurance. If you finance orders yourself, offer credit beyond the conventional short-term interest-free model, charge interest or fees, or use a group company or partner in the arrangement, obtain tailored legal or regulatory advice on the precise perimeter.
Check your BNPL provider before keeping it live
The first priority is simple: know the legal entity behind the checkout button. A brand name, plugin name or payment-service dashboard label may not be the entity that is actually lending. Record the provider’s full legal name, company number, trading name, FCA reference number where applicable, product name, integration route and the person in your business responsible for the relationship.
Then check its status. The FCA advises consumers to use its Firm Checker, select “Borrowing money, including credit card lending and credit information”, and look for authorisation plus permission to lend on an unsecured basis. A provider may instead appear in the temporary permissions regime, which allows eligible firms to provide DPC while moving through the authorisation process. Use the FCA Financial Services Register and retain a dated screenshot or PDF of the result in your supplier file. ([fca.org.uk](https://www.fca.org.uk/firms/financial-services-register?utm_source=openai))
This should not be a one-off procurement exercise. Set a diary review at least quarterly and immediately review status if the provider changes contracting entity, sends a regulatory notice, materially alters the product, or asks you to migrate integrations. The FCA’s temporary-permission arrangements are transitional, not a permanent substitute for authorisation. Your commercial agreement should require the provider to notify you promptly of any loss, restriction or material change of regulatory status.
Questions to put to your provider
- Who is the lender? Ask for the exact legal entity, its FCA status and confirmation that the particular product offered through your site is covered.
- Who owns each stage of the customer journey? Confirm responsibility for the credit decision, affordability assessment, agreement presentation, missed-payment notices, collections, hardship support and complaint handling.
- What is the refund process? Establish how and when the retailer tells the lender about a cancellation, partial return, price reduction, replacement or failed delivery, and when the customer’s payment plan is paused or adjusted.
- What data is shared? Map order, delivery, return and refund data; make sure privacy notices, processor terms and security controls match the real flow of information.
- What service levels apply? Agree contacts, response times, escalation points and a process for incidents that affect multiple customers.
- Who approves checkout copy? Ask the provider to approve all credit-specific wording, banners and emails that refer to its product, repayments, fees, eligibility or credit-file effects.
Keep the answers, signed contract, integration specifications and approval record together. These documents will help if a payment-plan adjustment is delayed, a customer says they were confused, or your provider relationship changes hands.
Make checkout messaging accurate, clear and properly separated
The lender has the formal duty to deliver the prescribed product information before the DPC agreement is made. That information includes the amount of credit, number and frequency of payments, payment amounts, cash price, the consequences of failing to pay, relevant late charges and whether a credit reference agency may be used. The FCA’s rules require the lender to give key information and make additional information available in a way the customer can reasonably access; it must not be obscured or buried among excessive material. CONC 4.2A in the FCA Handbook sets out the detail. ([handbook.fca.org.uk](https://handbook.fca.org.uk/handbook/conc4?date=15-07-2026&timeline=true))
A merchant should not duplicate the lender’s disclosures line for line or improvise its own. It should, however, ensure that its own parts of the purchase journey do not undermine them. For example, “Split your payment with Provider X, subject to Provider X approval” is much safer than “Get approved instantly”, “always interest-free” or “no consequences if you miss a payment”. The first identifies the lender and leaves the lending decision with it. The others can be inaccurate, particularly if charges, collection action or credit-file effects are possible under the agreement.
Use plain language and make the hand-off visible. Near the payment selector, name the provider. Make clear that choosing the option means applying for or entering a credit agreement with that provider, not simply selecting a delivery preference. Link to the provider’s terms and pre-contract information at the appropriate point. Do not preselect BNPL, make it visually dominant over full payment, or use urgency messaging that encourages a rushed borrowing decision.
A practical copy review
Review all customer-facing material, not just the checkout page: product pages, promotional banners, basket messages, abandoned-cart emails, social posts, influencer briefs, customer-service macros, returns emails and help-centre articles. Search for “BNPL”, “pay later”, “pay in”, “instalments”, “interest-free”, “credit”, the provider’s brand and any fee claims. Remove stale statements and submit the revised, credit-specific content to the provider for sign-off.
Separate the commercial sale from the credit agreement wherever possible. Your business can explain the goods, delivery date, returns policy and total cash price. The lender should own explanations about acceptance, affordability, repayment dates, credit searches, missed payments, fees, arrears and debt support. This separation reduces the chance that a well-meaning retail agent gives a misleading answer about a regulated credit product.
Build an escalation procedure customers can actually use
Customers do not experience your retailer and a BNPL provider as separate systems. They experience one purchase. A good escalation process therefore begins with a warm hand-off, not a dismissive “contact your lender” response.
Create a short decision tree for customer-service staff. First, establish whether the issue concerns the goods or the credit. A missing item, wrong size, faulty product, cancellation, delivery failure or return is normally a merchant issue. An application decline, affordability decision, repayment date, payment collection, late fee, credit-file concern, financial-difficulty request or lender complaint is normally a lender issue. A refund that has not appeared in the payment plan is usually a joint issue: the merchant must confirm the refund data and the lender must adjust the credit account.
For a goods issue, resolve it under your standard returns and consumer-rights process, then send the refund or adjustment data to the lender through the agreed channel without delay. Give the customer a written reference, the amount, the date submitted to the lender and realistic next steps. Do not promise that an instalment has been cancelled unless the lender has confirmed it.
For a credit issue, give the customer the provider’s correct contact route and, where your systems allow, transfer the case with the customer’s consent. If a customer says they are struggling to make repayments, treat that as urgent. Do not attempt to assess affordability, negotiate a repayment arrangement or give debt advice unless you are appropriately equipped and authorised to do so. Explain that the lender is responsible for support, and point the customer to the provider promptly. The FCA says lenders must contact customers after a missed repayment and provide support to those struggling with payments; it also signposts free help through MoneyHelper. ([fca.org.uk](https://www.fca.org.uk/consumers/buy-now-pay-later))
Use clear ownership and records
Every BNPL case should have an owner, even where another business must take the final action. Record the order number, lender reference, customer contact, issue type, dates, refund status, documents sent, hand-off time and promised update. For disputes involving both parties, nominate one retailer contact and one provider contact, agree who updates the customer, and set a time-bound next action.
Train staff not to make three common mistakes: telling a customer that a failed lender payment means the retailer has cancelled the order; telling them that a retailer refund automatically ends the credit agreement; or refusing to help because the credit contract is with someone else. Each can be wrong. Your team may not own the lending decision, but it owns a coherent customer experience and the evidence needed to resolve an order dispute.
Customers unhappy with their lender should first use the lender’s complaints process and can then take an unresolved complaint to the Financial Ombudsman Service. That route does not replace your own responsibility to investigate complaints about goods, fulfilment, returns or your staff’s statements. The Financial Ombudsman Service’s BNPL information is a useful link for your help centre. ([fca.org.uk](https://www.fca.org.uk/consumers/buy-now-pay-later))
Turn the new rules into a 30-day action plan
- Week one: list every BNPL product, checkout route, lender entity and customer touchpoint. Pause any option where you cannot identify the actual lender and its current status.
- Week two: check the lender on the FCA Register or confirm its temporary permission, obtain written confirmation of product coverage and review the commercial contract.
- Week three: audit all promotional and checkout wording, add a clear provider hand-off, and secure the provider’s approval for credit-specific copy.
- Week four: implement the escalation decision tree, train sales and service teams, test a refund-to-lender workflow and schedule recurring provider reviews.
Conclusion: be precise, not panicked
The 15 July 2026 change is significant for third-party BNPL lenders and valuable for customers, but it does not mean every online seller has suddenly become a regulated credit firm. The lender is responsible for the regulated lending activity in the usual third-party DPC model, while DPC broking by merchants is exempt. Supplier-provided credit sits differently and should not be swept into broad statements about the new regime.
For SME ecommerce owners, the practical task is to make the checkout relationship dependable: verify the provider, keep messaging accurate, define who handles each type of problem and ensure refunds do not strand customers with an incorrect payment plan. Review your live BNPL journey this month, document the result and ask your provider to confirm the escalation and communications arrangements in writing. That is a proportionate way to protect customers, preserve trust and keep a useful payment option working for your business.
