BNPL and Earned Wage Access in the US: Where State Licensing Now Applies

There is no federal licence for buy now, pay later (BNPL) or earned wage access (EWA) in the United States, so licensing is decided state by state. For BNPL, California treats pay-in-four plans as loans that need a California Financing Law licence, and New York has a dedicated BNPL licence whose rules DFS re-proposed in July 2026. For EWA, Nevada, Wisconsin, Missouri, Connecticut and Maryland require a licence or registration, California has required registration since 15 February 2025, and Maryland banned tips from 1 October 2026. At federal level, the CFPB's advisory opinion of 23 December 2025 treats qualifying employer-linked EWA as outside the Truth in Lending Act.

This guide covers only state actions we have verified on the regulator's or legislature's own site at 20 October 2026. For general state lending licences, see US lending licences by state and the US consumer lending licence page.

BNPL and EWA in plain words

BNPL lets a shopper split a purchase into instalments, often four equal payments, usually with no interest. The BNPL provider pays the merchant and collects from the shopper. Revenue comes mainly from merchant fees, with some providers also charging late fees or offering longer interest-bearing plans.

EWA lets a worker draw part of the pay they have already earned before payday. Employer-integrated EWA uses the employer's payroll data and is repaid by payroll deduction. Direct-to-consumer EWA works from the worker's own bank and income data and is usually repaid by debiting the worker's bank account after payday. Providers charge expedited delivery fees, subscriptions or optional tips, and almost all offer a free, slower option.

The licensing question for both is the same: is the product credit, and if so, does it fall inside the state's lending law?

The federal position in 2026

The December 2025 advisory opinion defines covered EWA by four features:

• The amount cannot exceed wages already earned, based on payroll data
• Repayment is by payroll deduction at the next pay date, not a debit from the worker's bank account
• The provider has no recourse against the worker if the deduction falls short, and does not collect, sell the debt or report to credit bureaus
• The provider does not assess the worker's individual credit risk

Covered EWA is not credit, so its fees are not finance charges under federal law. The opinion also says that, where an EWA product is credit, optional expedited fees and voluntary tips are generally not finance charges. It does not decide that other EWA products are credit. None of this binds the states, which is why state law now sets the licensing map.

BNPL in California: a licensed loan

California treats BNPL as lending. In March 2020 the state regulator, then the Department of Business Oversight and now the Department of Financial Protection and Innovation (DFPI), concluded that a major pay-in-four provider's plans were unlicensed loans. It found that the merchant credit sale structure did not change the substance. The provider agreed to lend to Californians only through an affiliate holding a California Financing Law licence and to refund US$905,000 of fees collected from more than 640,000 Californians.

The practical rule for any BNPL lender serving Californians is to hold the licence. The California Financing Law requires a licence for any business of making consumer or commercial loans, with US$25,000 minimum net worth, a US$25,000 surety bond and an annual report by 15 March.

BNPL in New York: a dedicated licence on the way

New York passed a BNPL-specific licensing law in 2025, Banking Law Article 14-B. It applies once DFS finalises its implementing rule. DFS first proposed the rule on 23 February 2026 and issued a revised proposal in July 2026 as new 3 NYCRR Part 423. The revised proposal, not yet final at 20 October 2026, would:

• Require a BNPL licence, with permission for each loan category: interest-free, interest-bearing or both
• Cover lenders that make BNPL loans, buyers of BNPL loans, and platforms through which consumers obtain BNPL loans from third parties
• Exclude credit from the seller of the goods itself, and credit for business purposes
• Cap interest at the general New York usury rate (16% a year)
• Limit penalty fees, with a safe harbour of up to US$8 and higher fees only with DFS approval
• Require capital sufficient for the business and a corporate surety bond in an amount DFS sets, or a deposit of eligible assets instead
• Take effect 180 days after the notice of adoption is published in the State Register

Existing BNPL lenders would have 45 days from the effective date to apply, and could continue operating while their applications are decided. Because the effective date runs from adoption, firms serving New Yorkers should prepare their applications now rather than wait for the final text.

EWA: states with licensing or registration

Several other states have passed EWA laws. We list only those we have checked against primary sources.

Two models are emerging. Nevada, Wisconsin and Missouri wrote EWA-specific laws that license providers and, in Nevada's case, state that compliant EWA is not a loan. Connecticut and Maryland brought EWA into their lending laws, with special rules that let EWA operate within them.

Enforcement has followed. In August 2026 Connecticut's Department of Banking entered a consent order with an EWA provider that had offered advances to Connecticut workers without a small loan licence, including a US$200,000 civil penalty and restitution of fees. The provider neither admitted nor denied the allegations.

Fee caps, tips and free options

Maryland's 2026 change reaches beyond EWA: consumer and commercial lenders under Maryland law may no longer solicit or accept tips at all.

What this means for product design

State law now shapes the product, not just the paperwork:

• Tips: banned in Maryland from 1 October 2026 for EWA providers and lenders. A tip-based model needs a state-by-state plan.
• Fees: Connecticut caps EWA charges at US$4 per advance and US$30 a month. New York's BNPL proposal sets an US$8 safe harbour for penalty fees.
• Free options: Connecticut and Maryland require at least one no-cost way to get each advance.
• Repayment: the CFPB's federal position depends on payroll deduction repayment and no recourse. Direct-to-consumer products that debit bank accounts sit outside it.
• Credit checks: Connecticut bans them for EWA, and the federal definition of covered EWA excludes individual credit assessment.
• Interest-bearing BNPL: New York's proposal caps interest at the usury rate, and California applies its lending law through the licence.

How BNPL and EWA sit with other licences

A BNPL or EWA licence is rarely the sole permission a provider needs. Three overlaps come up most often.

• Money transmission: a provider that holds or moves consumer funds, for example a wallet that receives advances or refunds, may also need state money transmitter licences. Maryland's 2025 law states that licensed EWA services are not money transmission, but most states have no such provision. Our US money transmitter licence page explains the test.
• General lending licences: an interest-bearing BNPL plan or a longer instalment product may need a state consumer lending licence wherever it falls inside that state's rate and size thresholds, whether or not the state has a BNPL-specific law.
• The UK: firms serving both markets need FCA authorisation for UK BNPL from 15 July 2026, covered in our guide to BNPL FCA authorisation.

Mapping all three at the start avoids launching a compliant credit product on a payment flow that is itself unlicensed.

A licensing plan for a BNPL or EWA launch

• Classify each product: interest-free BNPL, interest-bearing BNPL, employer-integrated EWA or direct-to-consumer EWA
• Check the federal position, then each target state's lending law and any BNPL or EWA statute
• Apply for licences or registrations in the states that require them before launch, starting with California and the EWA licensing states
• Prepare a New York BNPL application now so it can be filed within 45 days of the rule's effective date
• Redesign fees, tips and free options to meet the strictest state you serve, or vary them by state
• Diary annual reports: California by 15 March, Nevada by 15 April, Wisconsin financial statements by 1 July, and NMLS renewals from 1 November to 31 December
• Consider whether a bank partner suits the product; see bank partnership or your own lending licences

Regulatory Counsel advises BNPL and EWA providers on state licensing as part of our consumer credit practice, alongside UK BNPL authorisation for firms operating in both markets.