New FCA rules may fundamentally change what made BNPL successful warns…
With BNPL providers set to come under formal FCA regulation from 15 July 2026, the sector is preparing for a more structured regulatory framework around affordability checks, disclosures and consumer protections, changes that will move much of the market closer to traditional consumer credit oversight.
While the changes are designed to strengthen consumer protections and improve transparency, Sophie Njagi, fintech and payments expert, believes the regulation could also fundamentally reshape the commercial dynamics that made BNPL so successful in the first place.
Sophie Njagi comments: “The interesting part is that regulation could slowly remove that effect. Once affordability checks, disclosures and friction become more visible, BNPL starts feeling emotionally closer to a traditional credit product rather than a seamless checkout tool. If that happens, the competitive advantage shifts completely.
“The pressure of this regulation is likely to fall more on smaller or newer BNPL providers that grew very quickly with lean teams and lighter infrastructure. As regulation increases, they may need to invest in affordability monitoring systems, audit processes, compliance staff, reporting controls and more sophisticated customer monitoring. Depending on how the business is structured, that can become very expensive quite quickly, moving into potentially hundreds of thousands or even millions annually for some firms.
If smaller providers can’t justify those costs commercially, then we may see them either exit the market, partner with larger regulated institutions or reduce the types of customers they serve.
“Those who will succeed will be the businesses who have the strongest compliance setup, cheapest funding and deepest merchant relationships, basically more like traditional banking economics.
There’s also a retail angle people underestimate. A lot of merchants quietly rely on BNPL to maintain larger basket sizes during weaker consumer spending periods. So tighter regulation may affect retailers almost as much as the BNPL firms themselves.
This doesn’t feel like the end of BNPL but more like the sector evolving from a high-growth fintech story into a form of regulated financial infrastructure.”