1.6 Million Shoppers Were Just Locked Out of BNPL. Good — That £24,000 Debt Spiral Starts at £60.

The numbers are staggering. BNPL in the UK went from £60 million in 2017 to more than £13 billion in 2024, according to the FCA. Usage among UK adults jumped from 14% to 25% in a single year. Credit reference agency Experian tracked more than 100 million BNPL transactions by 8.5 million customers in 2025, worth over £7 billion in spending.

For most of that growth, the sector operated in what campaigners accurately called an "unregulated wild west." No FCA oversight. No mandatory affordability checks. No access to the Financial Ombudsman Service. No Section 75 protection.

Three firms — Klarna, Clearpay, and PayPal — dominate the market. They built businesses on the premise that splitting a £60 purchase into three payments isn't "real" credit. Their marketing was masterful: BNPL didn't feel like borrowing. That was the point.

For a detailed breakdown of how the rules work, see our complete guide to the new BNPL regulations.

The speed of that growth is the whole story. When credit cards launched, they had decades of incremental adoption and regulation evolving alongside. BNPL compressed that entire arc into six years — and for most of them, it operated outside the FCA's regulatory perimeter entirely. The result was predictable: a product that looked like a payment method but functioned like unregulated lending.

The new regime, effective 15 July 2026, brings BNPL under the same regulatory umbrella as every other consumer credit product in the UK. Here's what that means in practice:

FCA authorisation is now mandatory. Any firm offering BNPL must be approved by the Financial Conduct Authority. Unauthorised lending becomes illegal. This alone eliminates the worst operators.

Section 75 protection applies to purchases above £100. This is the same protection credit cards have provided for decades. If goods are faulty or the retailer goes bust, you can claim against the BNPL provider — not just the retailer — for purchases between £100 and £30,000. Martin Lewis, founder of MoneySavingExpert.com, called this "a game-changer for consumer rights."

Affordability checks are required before every loan. The Treasury says this ensures no one borrows what they cannot "realistically afford to repay." The checks are automated and instant — but they will decline some users.

Complaints can go to the Financial Ombudsman Service. Previously, if Klarna put an incorrect black mark on your credit file, you had nowhere independent to turn. Now the FOS can adjudicate — it expects roughly 2,000 BNPL cases by March 2027.

Debt advice before debt collectors. Lenders must direct struggling borrowers toward free debt advice — from National Debtline or MoneyHelper — rather than immediately handing them to collection agencies.

This is not radical. This is the baseline that credit cards, personal loans, and overdrafts have met for years. BNPL was the outlier — and not in a good way.

The BNPL industry's favourite number is 98.5% — the proportion of balances repaid on time, per Experian's 2025 data. It sounds reassuring. It is also almost entirely irrelevant to the case for regulation.

First, 98.5% repayment in a stable economy says nothing about what happens in a downturn. Job losses, illness, relationship breakdown — the events that trigger debt spirals — are precisely the events that turn "manageable" BNPL balances into default cascades.

Second, 1.5% of 100 million transactions is still 1.5 million late payments. Each one triggers fees — typically £6 to £12 — that compound across multiple providers. Money Wellness, a debt advice service, reports that people are increasingly spreading smaller purchases across multiple BNPL agreements rather than using it for occasional big items. Matthew Sheeran, its external relations manager, said: "Our concern isn't Buy Now Pay Later itself. It's what can happen when people begin relying on multiple forms of credit simply to make ends meet."

Third — and this is the point the industry never makes — late payers are the business model. BNPL providers charge retailers a percentage of each transaction (typically 2–6%). Late fees are supplementary revenue. If everyone paid on time, margins would compress. The 1.5% who don't are not an unfortunate side effect; they are a design feature.

Tim Riesner's story is the template. Multiple concurrent agreements. Small amounts. No single provider sees the whole picture. "Before you know it, it's thousands," he said. "Add in loans, credit cards, bits of finance here and there, and suddenly I owed £24,000."

If you already have credit card debt, a 0% balance transfer card can stop the interest clock while you pay it down — something BNPL never offered.

For those already carrying credit card balances alongside BNPL, a 0% balance transfer card can stop the interest accruing while you pay down the principal — a far better use of credit than splitting another £60 purchase.

The most prominent objection to BNPL regulation comes from Fair4All Finance, a not-for-profit set up through the Department for Culture, Media and Sport. Its chief executive, Kate Pender, estimates 10–30% of BNPL users will fail the new affordability checks and warns that loan sharks are "thrilled at the prospect."

This argument has two problems. First, if 30% of BNPL users cannot pass an affordability check, that is evidence the checks are necessary — not that they should be removed. A system that extends credit to people who demonstrably cannot afford it is not a system of financial inclusion. It is a system of extraction.

Second, the alternative to unregulated BNPL is not loan sharks. It is regulated credit — credit unions, responsible short-term lenders, 0% purchase credit cards, overdrafts with FCA-mandated limits. The Money and Pensions Service provides free guidance on all these options. The idea that closing the BNPL loophole leaves no alternative but illegal lending is false — and it's an argument that serves the BNPL industry's interests, not consumers'.

Klarna itself disagrees with Pender's assessment. A spokesman told the BBC: "Klarna doesn't share these concerns because the new rules largely formalise what we already do: we run affordability checks, show costs upfront and report to credit reference agencies." The largest BNPL provider in the UK is essentially saying: we already do this, and the sector will be fine.

Building even a modest cash buffer changes the equation entirely. Our savings guide walks through the best easy-access accounts paying competitive rates — earn interest on your safety net instead of paying late fees on BNPL.

If you're worried about being declined — or if you want to move away from BNPL entirely — here are the alternatives that don't depend on an unregulated credit product:

A 0% purchase credit card offers the same interest-free period (often 12–24 months) with full Section 75 protection on everything above £100, FCA regulation, FOS access, and — crucially — a single credit line you can track. Unlike five separate BNPL agreements each reporting to different credit agencies, one card shows you exactly what you owe.

A savings buffer of even £500 eliminates the need for most BNPL transactions. The average BNPL purchase is £60 — not an amount that requires credit if you have even a modest emergency fund. Read our guide to building an emergency fund.

Credit unions offer small, short-term loans at capped interest rates (3% per month maximum in Great Britain under FCA rules). They are member-owned, not profit-extracting. Find one near you through the Association of British Credit Unions.

If you're already struggling with BNPL or other debt, contact National Debtline (0808 808 4000) or StepChange — both free, both confidential, both FCA-regulated.

A proper emergency fund changes everything. With £1,000 in an easy-access savings account, a £60 purchase never needs to be split into instalments. Read our complete guide to building an emergency fund for a step-by-step plan that starts at £10 a week.

For the counterargument — that regulation will lock responsible users out of interest-free credit and push some toward illegal lenders — read the opposing view in our debate on BNPL regulation.