All Things FinReg


Driven by an increase in online and mobile app shopping during the COVID-19 pandemic, the “buy now, pay later” (BNPL) market has experienced exponential growth. BNPL is a type of short-term financing that allows consumers to make purchases and pay off the balances in typically interest-free, small-dollar installments.

Consumers made nearly $100 billion in retail purchases using BNPL programs in 2021, up from $24 billion in 2020. Usage spiked in the 2021 holiday season, especially among the younger generation. It seems the industry’s popularity is only getting started, with more retailers and payment firms jumping into the arena.

The explosion of the BNPL market, however, is attracting scrutiny from financial services regulators concerned about the lack of specific rules for point-of-sale credit and the potential risks to consumers. Federal regulators have taken a largely hands-off approach until now, but recent noteworthy shifts have signaled regulatory headwinds may be on the horizon.

What are some considerations that you should take into account if you are currently involved in or looking to explore the BNPL wave? Based on our experience in providing regulatory compliance counseling and handling government enforcement investigations, we review the regulatory spotlight on BNPL financing in this article and discuss potential considerations for merchants and payment providers as they explore BNPL.

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