Buy-now-pay-later is an appealing proposition. You get what you want now, but you delay settling the bill until later, with no interest and no fees.

It’s how lots of things are bought. The UK’s buy-now-pay-later (BNPL) sector has nearly 23 million users and was worth £28 billion in 2025.

In 2026 though, it will face a major transformation. From mid-July, its lenders – the likes of Klarna and PayPal – will be regulated in the UK for the first time by the Financial Conduct Authority watchdog.

This marks a major change for a sector that has largely operated outside consumer credit regulation – and could fundamentally change how millions of people manage their their finances.

The government says the new legislation is designed to protect shoppers, end the “wild west” of some BNPL schemes, and even drive economic growth.

So from July, BNPL lenders will have to run affordability checks. They will also need to be more transparent about terms and conditions, establish a proper system for handling customer complaints, and prove that they are financially stable.

And it’s easy to see why the sector might require a bit more oversight.

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