- Key insight: The Trump administration has taken a light approach to regulating buy now/pay later lending.
- What's at stake: There are emerging rules outside of the U.S. creating compliance challenges for BNPL firms.
- Forward look: Bank BNPL could benefit if buy now/pay later fintechs tighten underwriting.
The
What's happening around the world with respect to BNPL gains importance as U.S.-based players like Amazon and PayPal are emerging to a greater extent in foreign markets.
"I think it's only going to get more competitive and you'll see bigger brands get increasingly involved," Nick Maynard, vice president of research at Juniper Research, told American Banker.
A 2024 study from Juniper Research found that by 2028, BNPL users will grow by 107%, from 380 million users in 2024. More recent research from Juniper shows strong growth in BNPL in major global markets, including the U.S. and Europe. Juniper Research expects digital BNPL transaction value in the U.S. to grow 77.1% between 2026 and 2031. In Europe, it's expected to grow 71.5% in that time frame.
Heightened consumer protections
The predicted growth comes as Europe and the U.K. have taken steps to shore up consumer protections. In Europe, the Consumer Credit Directive 2, or CCD2, significantly expands EU consumer credit regulations to include BNPL services, which had been largely exempt. The directive was adopted in 2023 and is in the implementation stage, with full compliance required by November. Among other things, the rules classify BNPL as consumer credit. Providers must conduct mandatory affordability checks for consumers, and there are strict disclosure requirements.
The U.K. has also tightened
US players are watching Europe and the UK for direction
John Radecki, principal on EY's consumer banking team, said U.S. participants will be watching to see how consumer-oriented regulation plays out and impacts the growth of the BNPL markets in Europe and the U.K. "It will be very instructive to U.S. operators" he said, as the market continues to develop in the U.S. and there's a potential shift in regulation after Trump leaves office, either through legislation or if the next administration places a higher priority on consumer protection issues in the BNPL market.
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The CFPB did an about-face on its 2024-issued rule that would have treated BNPL products like credit cards, leaving states to step into the regulatory ring. New York
"If we did see a national regulator step in, it could benefit some operators, potentially those that are larger scale and have the ability to act at scale," Radecki said.
US providers may move to stricter underwriting
Even without increased regulation, U.S. providers may be headed toward stricter underwriting as ticket sizes increase. According to a December 2025 CFPB report, the average transaction amount for a BNPL loan was $135 in 2023, the most recent year for which data is available. "As you start scaling up, you need to invoke good credit judgment on the account," Brian Riley, co-head of payments at Javelin Strategy & Research, told American Banker.
Riley pointed to the recent Affirm
Banks stand to gain from the heightened scrutiny
With the new regulations in Europe and the U.K., nonbank players could be losing some of their advantages, Daniel Dawson, senior manager and cards and payments lead at Datos Insights, told American Banker.
In the past, fintechs and other BNPL providers had a competitive advantage over banks because they didn't have to perform stringent creditworthiness checks, said Robert Kilpatrick, manager at Datos Insights. The new regulation will force all providers to function more in line with how banks traditionally operate. Required transparency on late fees will also help level the playing field for banks, he added.
