Europe Tightens the Rules on Buy Now, Pay Later: What the 2026 Reform Means for Consumers and Platforms

A booming market faces a major regulatory shift as the EU introduces stricter transparency standards, solvency checks, and uniform obligations for installment-payment providers.

Buy Now, Pay Later (BNPL) has rapidly become a familiar feature of consumer spending habits in Italy, mirroring trends seen across much of Europe. What began as a niche option used primarily by digital-savvy shoppers has evolved into a mainstream payment method embraced across generations. The appeal is clear: quick approval, no interest, and the ability to split small purchases into manageable installments. Yet the landscape is about to change significantly. A new EU directive—set to be adopted by November 20 of this year and enforceable from November 20, 2026—will usher in a more rigorous regulatory framework that reshapes both consumer protections and provider responsibilities.

A Stricter Regulatory Line

At the heart of the reform is a redefinition of what counts as BNPL versus consumer credit. Today, the line is drawn at 90 days: installment plans shorter than this threshold are treated as BNPL, while longer plans fall under consumer-credit rules. Under the new directive, however, this boundary will be drastically lowered—to 50 days for in-store purchases and just 14 days for online transactions.

This change has immediate consequences. Platforms such as Klarna, Scalapay, and PayPal, which commonly offer repayment windows of 60 days, will be required to comply with consumer-credit regulations. These include detailed pre-contractual disclosures and mandatory assessments of a customer’s ability to repay. In other words, BNPL providers will soon be subject to obligations similar to those traditionally imposed on banks and financial institutions.

Strengthening Protections—But at What Cost?

The new rules aim to increase transparency and reduce the risk of consumers taking on debt they cannot manage. While this enhances protections, it also forces BNPL companies to overhaul internal processes, strengthen solvency checks, and standardize information across all offerings. The concern is that these higher compliance costs could ultimately be passed on to consumers, eroding the zero-interest advantage that has fueled BNPL’s success.

The timing is critical. The BNPL market in Italy has grown at breakneck speed: according to research from the Politecnico di Milano, transaction volumes jumped from €0.4 billion in 2020 to €6.8 billion in 2024. Growth is continuing in 2025 as well, with Crif reporting a 28% increase in the first half of the year. Such expansion reflects not only increased usage but also a widening demographic base. Older consumers, once wary of digital finance, have joined younger generations in embracing BNPL. Particularly notable is the rise of users with no prior credit history, who now make up around 17% of BNPL customers—nearly double the share seen in traditional small loans.

Platforms Adapt: Longer Terms and Hybrid Models

To prepare for the new regulatory landscape—and to stay competitive—major BNPL providers are already adjusting their strategies. PayPal has introduced installment plans extending up to 24 months, with interest rates that vary by term length. Klarna now offers six- and twelve-month options tied to the purchase amount. Scalapay, supported by its partnership with Deutsche Bank, provides plans of up to 36 months, sometimes interest-free and sometimes governed by agreements negotiated directly with merchants. These developments signal a gradual shift toward hybrid models that increasingly resemble conventional financing.

Traditional Alternatives Hold Their Ground

Despite BNPL’s rise, traditional financing tools remain firmly in place. In large retail chains, zero-interest loans are still widely used for big-ticket purchases, giving consumers predictable repayment terms without additional costs. Other solutions emphasize simplicity and accessibility: PagoDil, developed by Cofidis, allows customers to split payments up to €5,000 into monthly installments with no added fees, using a streamlined approval process based on immediate document verification. Similarly, Agos offers the Agospay Zero card, which enables expenses over €500 to be spread across ten monthly payments at no interest, aside from a small management fee.

Understanding the Risks

Even with stronger regulations on the horizon, the biggest risk associated with BNPL lies in user behavior. Many consumers perceive BNPL as a “light” form of credit, forgetting that multiple small commitments can quickly accumulate. This is particularly true for younger users, who may activate several installment plans without a clear picture of their total outstanding debt. BNPL companies themselves increasingly acknowledge this issue: unchecked layering of installment plans can lead to rising financial exposure.

The goal of the upcoming EU directive is to prevent such situations by ensuring that both providers and consumers have a clearer understanding of repayment obligations. Early intervention—whether through budget review, revised payment terms, or support from service providers—will become essential when installments begin to weigh heavily on household finances.

As 2026 approaches, Europe’s BNPL ecosystem is preparing for a transformation. The market will likely remain vibrant, but its next phase will demand greater responsibility, transparency, and awareness from both the companies that shape it and the consumers who rely on it.

Alessandro Fiorentino