What will new buy now, pay later rules mean for you?

New rules on buy now, pay later services are on the way - but concerns are being raised that it could limit access for some people.

Buy now, pay later lets you delay paying for your online shopping in two ways. 

You can either:

• put off paying for a purchase for 14-30 days
• ‘slice’ the cost of a purchase into smaller amounts to pay off over a number of months

But the nature of this option means that while spending is easy, keeping track of it can be difficult - and you could end up taking on more debt than you can afford.

That’s why the way buy now, pay later is regulated is being changed.

What’s changing?

From July 2026, lenders will have to check that people can afford to repay loans and give them support if they get into financial problems.

Borrowers will also have the right to complain to the financial ombudsman if something goes wrong.

The Financial Conduct Authority (FCA) hopes this will stop people from taking on more debt than they can afford.

How will the rules work in practice?

Despite the rules being designed to protect consumers, some are warning that stricter checks could mean fewer people are able to use buy now, pay later, even if they’ve managed it responsibly in the past.

And that could push them straight towards more expensive or less regulated alternatives instead.

This raises real questions about how the new rules will work in practice.

If they’re too strict, some people could lose access to a form of credit they’ve used without any problems.

And if they don’t go far enough in protecting vulnerable people from falling into debt, then what real difference will they make?

Up to a third of buy now, pay later users could lose access

Research from Fair4All Finance suggests that between 10% and 30% of current users could lose access once the new rules come into force.

And interestingly, nearly half of those who may be rejected haven’t missed a buy now, pay later payment before.

So Fair4All Finance is worried that people might turn to options such as high-cost credit or borrowing from friends and family, where regulation isn’t as tight and costs can be higher.

Niall Alexander, credit and consumer markets lead at Fair4All Finance, agreed that regulating buy now, pay later is welcome and needed.

However, he stressed that it must be balanced and fair.

“Regulators should focus on reducing harm among frequent users, while preserving access for those who use buy now, pay later safely,” he said.

How many people use buy now, pay later?

Figures from UK Finance show that 14% of British adults used buy now, pay later in 2023.

But in 2024, that went up to 25% - one in four.

Fashion accounted for nearly half (46%) of buy now, pay later transactions in 2024, with people spending an average of £114.