The development of "buy now, pay later" is hindered, and the UK will legislate for regulation

The "buy now, pay later (BNPL)" service has been popular with foreign consumers since its launch. Last year, the use of BNPL in the UK almost quadrupled. Since the outbreak of the epidemic, it has further catalyzed its development. 5 million people have used this service, with a total loan amount of 2.7 billion pounds.

Although this service is convenient and can stimulate consumer spending, there are still many "gray areas" so far , which means that the interests of consumers and businesses are not properly protected.

In response to this, financial institutions in the UK are also taking steps to crack down on the growing BNPL industry, which has flourished in the UK and has seen global regulators tighten their grip.

The UK Financial Conduct Authority ( FCA) said on Monday that   Four BNPL providers , including Afterpay's UK subsidiary Clearpay, ASX-listed Openpay and Laybuy, and Commonwealth Bank-backed Swedish company Klarna , requested changes to their contracts after identifying potential harm to consumers. The FCA's executive director of consumer and competition said the four BNPL providers also agreed to this approach.

While it cannot directly regulate BNPL companies, the FCA said it would use the UK’s consumer rights law to make their contracts fairer and make it easier for consumers to understand and reflect on how they use these contracts when using BNPL.

The FCA said in February last year that BNPL credit deals offered by online retailers through financial institutions such as Afterpay and Klarna must be brought within the scope of its rules "as a matter of urgency" because of the potential for significant harm to consumers.

It is understood that the UK government will legislate this year to regulate BNPL companies and activities, with the FCA writing a rulebook.

In addition to the UK, regulators are also gradually regulating and managing BNPL companies in the U.S. Last December, the U.S. Consumer Financial Protection Bureau (CFPB) asked BNPL companies including Afterpay and Zip, U.S. companies Affirm and PayPal, and Sweden's Klarna to increase the transparency of their credit businesses as part of an investigation into the industry.

As BNPL services are not currently designated as payment systems under the Payment Systems Regulation Act, the government said it would use the findings of the Treasury Payment Systems Review to develop more targeted rules to ensure fees are overseen.

BNPL

U.K.