MEMA Scope · Assessment
Do retailers offering buy now pay later need FCA authorisation?
A retailer or online business lets customers pay later or in instalments, either through a third-party buy now pay later provider at checkout or by deferring payment itself. Review the initial view below and answer a few questions to refine it.
- Personalised to your business
- FCA rule references
- Follow-up questions available
Exclusion or exemption may apply
Offering interest-free pay later may fall outside regulation for a merchant
From 15 July 2026 the FCA regulates deferred payment credit provided by third-party lenders. It has said merchants that offer their own deferred payment credit directly are outside the regime, and that broking of deferred payment credit is exempt. Credit that charges interest or fees, or runs beyond 12 instalments or 12 months, is a different position.
Route to consider: May fall outside the perimeter if an exclusion applies
Why this was flagged
- 1Deferred payment credit (buy now pay later) became regulated on 15 July 2026, but the FCA has said the regime applies to lenders that finance a merchant's customers, not to merchants offering their own deferred payment directly.
- 2The position changes if the credit charges interest or fees, or runs for more than 12 instalments or 12 months, because that can be an ordinary regulated credit agreement.
Questions still to resolve
Answer to refine the view. The result updates as you go.
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Does a separate lender provide interest-free pay-later credit (12 or fewer instalments, 12 months or less) that you only present at checkout?
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Do customers owe you directly, and does the credit charge interest or fees, or run for more than 12 instalments or 12 months?A merchant’s own interest-free, short-term deferral is treated differently.
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Do you introduce customers at checkout to a separate lender whose credit charges interest or fees, or runs for more than 12 instalments or 12 months?
Regulatory basis to examine
Your next steps
- 1Confirm which party enters into the credit agreement with the customer
- 2Check the terms against the interest-free, 12-instalment and 12-month limits
- 3If a third party lends, check its authorisation or temporary permission on the FCA register
- 4Review how the option is presented at checkout, including financial promotions
Where applications for this model most often fall short
- A clear map of who is the lender and who contracts with the customer
- The product terms showing interest, fees, instalments and duration
- Checkout journey screenshots and promotional wording
This is an initial indication from published FCA material, not an FCA determination or legal advice.
If authorisation is required, check the firm’s governance, policies, resources and application preparedness.
MEMA Scope gives an initial view from published FCA material. It is not legal advice or an FCA determination. Automatic matching and typed questions use AI only to choose a profile and to answer from vetted guidance; the assessment itself is never written by AI.
About this business model
A retailer or online business lets customers pay later or in instalments, either through a third-party buy now pay later provider at checkout or by deferring payment itself.
From 15 July 2026 the FCA regulates deferred payment credit provided by third-party lenders. It has said merchants that offer their own deferred payment credit directly are outside the regime, and that broking of deferred payment credit is exempt. Credit that charges interest or fees, or runs beyond 12 instalments or 12 months, is a different position.
This page gives an initial view from published FCA and legislation sources. It is not an FCA determination or legal advice. Not your business model? Describe your business in MEMA Scope.
Retailer offering buy now pay later: frequently asked questions
Is buy now pay later regulated in the UK?
The FCA began regulating deferred payment credit, commonly known as buy now pay later, on 15 July 2026. The regime covers third-party lenders that finance a merchant's customers; the FCA has said merchants that offer their own deferred payment credit directly are not caught, and that broking of deferred payment credit is exempt.
Does a retailer offering a BNPL provider at checkout need FCA permission?
For interest-free deferred payment credit the FCA has said broking is exempt, so a retailer presenting a lender's product may not need permission. If the credit charges interest or fees, or runs beyond the short limits, introducing customers can be credit broking and limited permission may be available.
What could change the answer for retailers offering buy now pay later?
From 15 July 2026 the FCA regulates deferred payment credit provided by third-party lenders. It has said merchants that offer their own deferred payment credit directly are outside the regime, and that broking of deferred payment credit is exempt. Credit that charges interest or fees, or runs beyond 12 instalments or 12 months, is a different position. It can change depending on the answers to questions such as: Does a separate lender provide interest-free pay-later credit (12 or fewer instalments, 12 months or less) that you only present at checkout? Do customers owe you directly, and does the credit charge interest or fees, or run for more than 12 instalments or 12 months? Do you introduce customers at checkout to a separate lender whose credit charges interest or fees, or runs for more than 12 instalments or 12 months?
Which FCA rules should retailers offering buy now pay later look at first?
Start with: FCA: regulating buy now pay later; PS26/1: regulation of deferred payment credit; CONC 16: temporary permission requirements for deferred payment credit lenders; Credit broking. This is an initial view from published FCA material, not an FCA determination.
What are the first steps for retailers offering buy now pay later?
Confirm which party enters into the credit agreement with the customer. Check the terms against the interest-free, 12-instalment and 12-month limits. If a third party lends, check its authorisation or temporary permission on the FCA register. Review how the option is presented at checkout, including financial promotions.
Businesses we check
MEMA Scope covers 32 common business models. Each page explains whether that kind of business may need FCA authorisation, the rules to look at and the routes to consider.
Consumer credit
- Do car dealers offering finance need FCA authorisation?
- Do motor finance brokers need FCA authorisation?
- Do consumer lenders need FCA authorisation?
- Do debt collectors and debt administrators need FCA authorisation?
- Do debt management and debt advice firms need FCA authorisation?
- Do credit lead generators and comparison sites need FCA authorisation?
- Do rent-to-own and vehicle leasing providers need FCA authorisation?
- Do credit brokers introducing customers to lenders need FCA authorisation?
Payments and e-money
- Do payments apps and payment processors need FCA authorisation?
- Do small payment institutions need FCA authorisation?
- Do e-money issuers and digital wallets need FCA authorisation?
- Do agents of payment institutions need FCA authorisation?
- Do open banking providers need FCA authorisation?
- Do money transfer and remittance businesses need FCA authorisation?
- Do marketplaces handling payments need FCA authorisation?
Insurance
Mortgages
Investments and wealth
- Do financial advisers need FCA authorisation?
- Do discretionary investment managers need FCA authorisation?
- Do investment platforms and wealth-tech firms need FCA authorisation?
- Do crowdfunding and peer-to-peer lending platforms need FCA authorisation?
- Do corporate finance boutiques need FCA authorisation?
Other regulated activities
- Do claims management companies need FCA authorisation?
- Do funeral plan providers and sellers need FCA authorisation?
- Do introducers and referral partners need FCA authorisation?
- Do international firms entering the UK need FCA authorisation?
- Do accountants and solicitors giving financial advice need FCA authorisation?
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