ICYMI – Momentum Is Building For Level Regulatory Playing Field In BNPL Marketplace

As a modern-day alternative to traditional layaway, “Buy Now Pay Later” (BNPL) credit is taking the nation by storm and the number of Americans using these products has climbed 300% every year since 2018. 

In two new op-eds appearing in American Banker last week, the Consumer Bankers Association (CBA) and the Center For Responsible Lending (CRL) warned the added convenience of BNPL may also bring heighted risk to consumers. These concerns, coupled with the CFPB’s recent inquiry into the business practices of five leading fintech providers make it clear – momentum is building for policymakers to institute a level regulatory playing field and ensure consumers are protected in the BNPL marketplace. 

Many of the nation’s largest merchants have partnered with fintechs to provide millions of Americans the ability to choose an installment financing plan at checkout. While these firms may offer added flexbility, some users of these platforms lack the high level of protections they have come to expect from their bank, which — unlike a fintech provider — is subject to stringent federal oversight requirements.

As CRL President Mike Calhoun explained:

BNPL products do not offer the standard consumer protections required of credit card providers or other regulated lenders, and their opacity regarding fees and repayment terms could easily place unwitting consumers into harmful, unaffordable debt. Regulators should ensure that BNPL lenders make loans only after determining the borrower’s ability to repay.”

Calhoun added:

Unaffordable credit may provide a quick inflow of cash, but over the longer term — which, in the case of BNPL, can be just a few weeks or months down the road — unregulated fintech products can add to the debt burden of consumers already overextended by debt […] the time for regulators to rein in BNPL is now.

Commenting on what steps can be taken to protect consumers from unwanted debt, fraud, and abuse, Brian Fritzsche, CBA’s Assistant Vice President and Regulatory Counsel, wrote

“As more Americans choose BNPL financing as a credit alternative, all consumers deserve the certainty of knowing they are receiving the highest level of protections, whether they choose a product issued by a fintech or a traditional bank. To achieve this, policymakers must institute a level regulatory playing field in the BNPL marketplace.Doing so will help ensure consumers can safely benefit from the features of this transformational banking innovation.”

To read CBA’s full op-ed, Consumer protections should apply to buy now/pay later firms, too, click HERE

To read CRL’s full op-ed, Regulate buy now/pay later. Now, click HERE.


After the CFPB issued a series of orders last month to collect information on the business practices of five fintech companies offering BNPL credit, including Affirm, Afterpay, Klarna, PayPal, and Zip, CBA’s President & CEO Richard Hunt said

“It’s good to see the CFPB take this much-needed step to protect consumers. As the rise in banking activity outside our nation’s well-regulated and well-supervised banking system accelerates, so too does the risk to consumers who do not receive the same level of protection from fintech companies as they do from traditional banks. Our members believe in and embrace the highly competitive banking environment and the positive innovations that stem from it, including BNPL products. We welcome efforts by the CFPB and other regulators to ensure a level playing field, regardless of where American families go – or the tools they use – to meet their financial needs.” 

To learn more about the rapid growth of BNPL and the threat posed to consumers from under-regulated fintech providers, click HERE.