Buy now, pay later becomes credit. What changes on 20 November

For most of its short history, the button that lets you split a €90 pair of trainers into three payments has not legally been a loan. EU consumer credit law did not cover credit under €200, credit without interest or fees, or credit repaid within three months, and buy now, pay laterBuy now, pay later (BNPL)Paying for a purchase in instalments or after a delay, usually through a third party such as Klarna, PayPal or Scalapay, often without interest.Read in the glossary → was built to fit through all three gaps at once.¹

That ends on 20 November. The EU’s second Consumer Credit DirectiveConsumer Credit Directive (CCD2)The revised EU directive on consumer credit, applicable from 20 November 2026. It tightens creditworthiness checks, brings buy-now-pay-later into scope and gives a right to human review of automated decisions.Read in the glossary → applies from that date and brings most of these offers into credit law: a creditworthiness check before you can use them, standard information on what happens if you pay late, a 14-day right to cancel, and a warning in every advert that borrowing money costs money.²³ This piece explains what changes at the checkout, why regulators decided it was needed, and why the date will not mean the same thing in every country.

A real change, unevenly deliveredIn brief

From 20 November, Klarna, PayPal’s pay-in-instalments offers, Scalapay, Alma, Clearpay and similar services must check that you can afford each purchase and give you the same rights as for any other loan. The data from the Netherlands, France and Germany show why: missed payments and fees are common among young users. But 16 member states, including France, Spain and the Netherlands, had not finished writing the rules into national law by October, and in countries without a law, the directive alone does not bind the companies. Whatever your country, the cheapest habit is the same: never use instalments for something you could not pay for today.

What becomes credit

Under the new directive, credit is credit whatever the amount, and whether or not it carries interest. The exemptions that made third-party BNPL possible disappear: interest-free credit, loans below €200, and loans repaid within three months with “insignificant” charges are all inside the rules. The upper limit also rises from €75,000 to €100,000.³

One narrow exemption survives. A shop that lets you pay later itself, without a third party providing the credit, free of interest and with only limited late charges, stays outside if you pay within 50 days of delivery. For large online sellers the window shrinks to 14 days, and only if no third party offers or buys the credit.³ As one law firm summed it up, firms “will no longer be able to rely on third party BNPL providers for exemption”.²

There is one unsettled case. Germany’s popular “pay by invoice in 30 days”, where the shop’s claim is sold to a provider such as Klarna, is read by some lawyers as covered and by others as still outside under the German law.⁴ If you shop in Germany, do not assume every invoice purchase comes with the new protections.

What changes for you

The directive asks for a lot, and most of it lands on the screen you see before you pay.³⁵

• A credit check for each purchase. Lenders must make a “thorough” assessmentCreditworthiness assessmentThe lender's check, before granting credit, that you are likely to be able to repay it.Read in the glossary → of whether you can repay, and lend only if you probably can. They may not use your social media or health data, and the decision may not rest on your credit history alone. If a machine decides, you can ask for a person to review it.
• No pre-selected credit. Pre-ticked boxes do not count as consent, and lenders cannot push credit you did not ask for, such as a pre-approved limit or an unrequested increase.
• Clear information before you commit, including the cost and the consequences of paying late, in a standard format.
• 14 days to change your mind, without giving a reason.
• A warning in every ad. The standard wording is “Borrowing money costs money”. France’s version reads “Attention ! Un crédit coûte de l’argent et doit être remboursé !”.⁶ Ads may not claim that credit improves your finances or replaces savings.
• Help before enforcement. Before chasing a debt, lenders must offer “reasonable forbearanceForbearanceConcessions a lender makes to a borrower in difficulty, such as more time to pay, before chasing the debt.Read in the glossary →” where appropriate, such as more time, and point borrowers in difficulty to free, independent debt advice.

Countries may apply a lighter regime to loans under €200, loans free of interest and charges, and short loans with negligible fees: fewer advertising and paperwork rules. The credit check still applies.⁵ France used that option, keeping the credit check, the information sheet and the 14-day withdrawal right for small instalment plans.⁷

Why regulators stepped in

BNPL is no longer marginal. In Germany it accounted for about 20% of the value of online purchases in 2024 according to Worldpay, against about 8% across Europe.⁸ In France, instalment payments reached €9.8 billion of new lending in 2025, 14.6% of consumer credit excluding overdrafts.⁹

How much of online shopping is paid later

Buy now, pay later as a share of e-commerce value, 2024. The dashed line is the European average.

The clearest picture of the risks comes from the Netherlands, where the regulator collected data from the four main providers. In 2024, 38% of BNPL users received at least one formal default notice, and 42% of those under 25. About 6% of users had a debt sent to collection agencies, 9% among 18 to 24 year olds. Collection costs of up to €40 nearly doubled the original debt in one case in three. And 92% of the purchases that led to late charges were for €250 or less, below the Dutch threshold for a credit check.¹⁰

In the Netherlands, the young end up in collection

Share of BNPL users with a debt sent to a collection agency in 2024, by age. Across all users: 6%.

The AFM also looked at the bank accounts of 18 to 34 year olds. Among frequent users, 65% paid more than one BNPL provider in the same month, a pattern known as stackingLoan stackingHolding several small loans at once, often with different providers, so that no single lender sees the full picture.Read in the glossary →, and one user in six spent more than 90 days overdrawn in 2024. The regulator cautions that this shows a link, not that BNPL caused the overdrafts.¹⁰

German data point the same way. In a BaFin survey of almost 5,000 people, 21% of users had paid late at least once, 26% had paid dunning feesDunning feeA fee charged when a payment is late and the creditor sends a reminder or formal demand.Read in the glossary → and 14% had lost track of what they owed, rising to 24% among under-30s.¹¹ Germany’s consumer federation collected cases from debt counsellors: one 18-year-old on €150 a month of pocket money made 39 BNPL purchases in three months and ended up owing €3,107.74.¹²

In France, the Banque de France estimates that instalment plans and mini-loans, 14.6% of consumer credit, caused 10.5% of credit repayment incidents in 2025 and appeared in 16.4% of over-indebtednessOver-indebtednessBeing unable to meet your debts and essential expenses; in France, a formal procedure at the Banque de France.Read in the glossary → files. People aged 18 to 29 made up 12% of new over-indebtedness filers in 2025, against 5% in 2022.⁹

France: more young people file for over-indebtedness

People aged 18 to 29 as a share of new over-indebtedness filers. No figure published for 2023.

The research on spending explains the mechanism. Economists studying US shoppers found that access to BNPL “increases both total spending levels and the retail share in total spending”, by more than standard economic models can explain.¹³ The US consumer bureau found that 63% of BNPL borrowers held several loans at once during a year.¹⁴ Splitting a price makes it feel smaller, and several small splits are easy to lose track of.

20 November, but not everywhere

The directive had to be written into national law by 20 November 2025. In January 2026 the Commission warned 23 of the 27 member states that they had not done so completely. By October, 16 were still on notice, including France, Spain and the Netherlands.¹⁵¹⁶

From a Swedish rule to an EU deadline

Blue: rules adopted or in force. Red: deadlines missed. Hover or tap each point for the detail.

The gaps matter because a directive does not, on its own, impose duties on private companies. Where the national law is missing, BNPL providers are not legally bound by the new rules on 20 November, although customers can still rely on the old national credit rules where they apply. The situation in the largest markets:

• Germany: law published in May 2026; the new rules apply from 20 November.¹⁷
• Italy: decree published in January 2026, bringing BNPL inside consumer credit and licensing non-bank lenders.¹⁸
• France: an ordinance and two implementing decrees apply from 20 November, including the credit check for instalment plans and an optional check of the national register of repayment incidentsFICPFrance’s national register of credit repayment incidents, run by the Banque de France. It lists people who missed repayments or are in an over-indebtedness procedure; it holds no positive data.Read in the glossary →. The Commission still lists France as incomplete.⁶¹⁹¹⁶
• Netherlands: the bill passed the lower house on 6 October and still waits for the Senate. It would also ban BNPL for minors.²⁰²¹
• Spain: the government approved a draft in January, but it never reached parliament, which has since been dissolved for the 29 November election.²²

Some providers are changing their products anyway. Klarna has told merchants that, from 20 November, EU customers who pay with a saved Klarna method will have to review its credit terms and disclosures before completing a payment.²³

The United Kingdom, outside the EU, moved first. Since 15 July 2026 BNPL there has been regulated by the Financial Conduct Authority, with an affordability check on every purchase, even under £50, access to the Financial Ombudsman and Section 75Section 75A UK rule that makes the credit provider jointly liable with the seller if something bought on credit goes wrong.Read in the glossary → protection on purchases paid this way.²⁴ The FCA’s own research found that BNPL users are younger and almost twice as likely to be in serious financial difficulty as the population as a whole.²⁵ A study for Fair4All Finance estimates that 10% to 30% of current users could be refused once the checks bite.²⁶

What paying late costs

Late fees are where the business model and the user’s interest meet. They differ widely, which makes the choice of provider worth a minute’s thought.

Sources for the table: provider fee pages and terms; Actu Alt Plus; Finyear.^2728293031

Scalapay’s Italian terms show something else: a service fee on pay in 3 and pay in 4 that its own information sheet translates into an annual percentage rateAnnual percentage rate (APR)The total cost of a loan, interest and compulsory fees included, expressed as a yearly percentage so offers can be compared.Read in the glossary → of up to about 14% to 15%.²⁹ “Interest-free” does not always mean free.

For the providers, the timing is delicate. Klarna listed in New York in September 2025 at $40 a share; at the end of October 2026 the shares traded around $13, about two-thirds lower.³²³³ Its credit loss provisions came to 0.52% of transaction volume in the second quarter of 2026, after a peak of 0.72% in the third quarter of 2025, and it cut its volume forecast in August, citing “a more measured view of European volumes”.³⁴³⁵ Its third-quarter results are due on 17 November, three days before the rules apply.³⁶

Klarna’s provisions for credit losses

Quarterly provisions as a share of gross merchandise volume. Q3 2026 results are due on 17 November.

Using it safely

The new rules make the worst cases rarer, not impossible. A few habits do more than any regulation:

• Pay in full if you can. Use instalments only for something you could pay for today, and only once at a time. Splitting a purchase you cannot afford is borrowing, whatever the button says.
• Count your plans. Before a new split, add up what you already owe across providers this month. Stacking several is how small debts turn into collection letters.
• Check the late fee and any service fee before you choose the provider. Some charge nothing for a missed instalment; others charge every time.
• Use the 14 days. Once the rules apply in your country, you can cancel the credit within 14 days without giving a reason.
• If you are falling behind, say so early. Lenders must now consider forbearance and point you to free debt advice before enforcement.

A loan with a friendlier name

For a decade, splitting payments was sold as a feature of the checkout rather than a loan, and the law agreed. From 20 November most of Europe stops agreeing. The credit check will refuse some shoppers who should not be borrowing, the warning will sit next to every “pay in 3” button, and late payers will have a right to be treated as borrowers rather than as missed invoices.

The protections arrive late in a third of the EU, and they do not change the arithmetic for the user. Three small payments are still a debt. If you would not take a loan for a pair of trainers, the button that splits the price is the same decision in a friendlier font.

Sources

All links accessed 2 November 2026.

Footnotes

1. EUR-Lex, Directive (EU) 2023/2225 on credit agreements for consumers, 18 October 2023, repealing Directive 2008/48/EC. ↩

2. HLC, “EU Second Consumer Credit Directive: scope and impact for buy now pay later providers”, 25 July 2024. ↩ ↩²

3. Abreu Advogados, “New rules on consumer credit in the EU: Directive 2023/2225”, November 2023. ↩ ↩² ↩³ ↩⁴

4. A&O Shearman, “Buy now pay later: impact of the new EU consumer credit directive on supplier financing models in Germany”, 19 February 2026; BWR & Partner, “Verbraucherkreditrichtlinie 2026”, 10 October 2026. ↩

5. Private Law Wiki, “CCD2 and BNPL: the new EU Consumer Credit Directive”, 29 September 2026. ↩ ↩²

6. Service-Public.fr, “Crédit à la consommation : les règles évoluent pour prévenir le surendettement”, updated 27 October 2026. ↩ ↩²

7. Victoris Avocat, “Paiement en plusieurs fois aux particuliers : ce qui change le 20 novembre 2026”, 11 October 2026. ↩

8. Worldpay Global Payments Report 2025, 2024 data, via PaymentsCMI, “The most popular payment methods in Europe 2025”. ↩

9. Banque de France, Rapport annuel de l’Observatoire de l’inclusion bancaire 2025, June 2026; press release, 25 June 2026. ↩ ↩²

10. AFM, Buy Now, Pay Later Marktupdate 2025, June 2025 (provider data for 2024). ↩ ↩²

11. BaFin, “Buy now, pay later: Jede(r) Siebte verliert schon mal den Überblick”, 2 February 2026 (survey of 4,936 people, April 2025). ↩

12. vzbv, “So gefährlich ist Buy Now, Pay Later wirklich”, 9 October 2025. ↩

13. Di Maggio, Katz and Williams, “Buy Now, Pay Later”, NBER Working Paper 30508, 2022. ↩

14. Consumer Financial Protection Bureau, “CFPB research reveals heavy buy now, pay later use among borrowers with high credit balances and multiple pay-in-four loans”, 13 January 2025. ↩

15. European Commission, “January infringements package: key decisions”, INF/26/115, 30 January 2026. ↩

16. EUbusiness, “October 2026 EU infringements package: key decisions”, October 2026. ↩ ↩²

17. Bundesgesetzblatt, Gesetz zur Umsetzung der Richtlinie (EU) 2023/2225, BGBl. 2026 I Nr. 139, 18 May 2026. ↩

18. Normattiva, Decreto legislativo 31 dicembre 2025, n. 212, Gazzetta Ufficiale, 9 January 2026. ↩

19. Légifrance, Décret n° 2026-719 du 1er août 2026 relatif au crédit à la consommation. ↩

20. Eerste Kamer, Wetsvoorstel 36.924, Implementatiewet herziene richtlijn consumentenkrediet. ↩

21. Officiële bekendmakingen, Kamerstuk 36924 nr. 3, Memorie van toelichting. ↩

22. Economist & Jurist, “Bruselas da dos meses a España para adaptar el crédito al consumo”, 6 October 2026. ↩

23. Stripe Support, “EU BNPL regulation update: 20 November 2026 changes to Klarna future payments”. ↩

24. Financial Conduct Authority, PS26/1: Regulation of Deferred Payment Credit, 11 February 2026; Regulating Buy Now Pay Later, updated 15 July 2026. ↩

25. Financial Conduct Authority, Occasional Paper 69: “Distress deferred? The impact of BNPL credit on consumer indebtedness and arrears”, July 2025. ↩

26. Fair4All Finance, Buy Now Pay Later: a review of the markets, risks and trends, January 2026. ↩

27. Klarna France, Payer en 3 fois. ↩

28. MoneySavingExpert, “Klarna introduces late payment fees”, February 2023. ↩

29. Scalapay, Foglio informativo, Italia, 11 August 2025. ↩ ↩²

30. Actu Alt Plus, “Frais de retard Klarna, PayPal, Alma, Floa : combien ?”, 18 October 2026. ↩

31. Finyear, “Alma atteint la profitabilité en 2025”, March 2026. ↩

32. Klarna via Business Wire, “Klarna announces pricing of its initial public offering”, 9 September 2025. ↩

33. The Motley Fool, Klarna Group (KLAR) quote, accessed 2 November 2026. ↩

34. Klarna, Q2 2026 earnings release, 18 August 2026. ↩

35. Klarna, Q1 2026 earnings release, 14 May 2026; Q4 2025 earnings release, February 2026. ↩

36. StockTitan, “Klarna to publish Q3 2026 earnings on November 17”. ↩

37. Bird & Bird, “Swedish law now requires a direct payment option to be displayed first”, 2020. ↩