BNPL for Retailers and Marketplaces: When You Need FCA Permission After 15 July 2026

A merchant, marketplace or checkout provider that only offers a third-party lender's interest-free instalments does not need its own FCA permission after 15 July 2026, because broking buy now pay later credit is excluded from regulation for every merchant. Permission is needed when the business itself becomes the lender, or when a lender buys the goods and resells them to the customer on credit under an arrangement with the merchant. Entering into a new BNPL agreement without permission has been a criminal offence since 15 July 2026. Lenders in the temporary permissions regime must apply for full authorisation by mid-January 2027, six months after 15 July 2026.

What changed on 15 July 2026

Interest-free buy now pay later is called deferred payment credit in the legislation. It means credit to buy goods or services, repaid in no more than 12 instalments within 12 months, with no interest or other charges. Until 15 July 2026 these agreements were exempt from regulation under article 60F(2) of the Regulated Activities Order. The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 removed that exemption for third-party lending from 15 July 2026, which the FCA calls Regulation Day.

The FCA's final rules are in PS26/1, published on 11 February 2026. The FCA reports that deferred payment credit grew from £0.06bn in 2017 to over £13bn in 2024, and that 10.9 million adults used it in the 12 months to May 2024.

From Regulation Day, a lender must hold consumer credit lending permission or a temporary permission before it enters into a new agreement. It must carry out a proportionate creditworthiness check before each agreement, give clear information before the customer commits, support customers in financial difficulty and give access to the Financial Ombudsman Service. Agreements entered into before 15 July 2026 stay unregulated and can still be serviced.

The test: who lends and who supplies

The question for any retailer, marketplace or payments business is not whether it "offers BNPL". It is whether it is the lender, the supplier, or only the business that introduces the customer. A regulated deferred payment credit agreement exists where the lender and the supplier of the goods are different businesses. It also exists where a lender, under a prior arrangement with the merchant, buys the goods and becomes the supplier to the customer itself. That second model is caught so it cannot be used to recreate the old exemption.

The exemptions that remain

Several routes stay outside the new regime. Each depends on facts, so the contract chain and the customer journey should be checked against the legislation, not against a provider's marketing.

• Own credit. A supplier that provides its own interest-free credit for its own goods or services stays exempt, provided repayment is in no more than 12 instalments within 12 months and nothing is charged. The FCA confirmed this in its press release of 11 February 2026.
• Broking by any merchant. Article 36FB of the Regulated Activities Order excludes credit broking for regulated deferred payment credit. The (No. 2) Order 2025 removed the exception for domestic premises suppliers, meaning businesses that sell in the customer's home, from 3 December 2025.
• Agreements made before 15 July 2026. They remain unregulated for their whole life.
• Insurance premium finance. Interest-free instalments that fund insurance premiums are outside the new regime.
• Employee schemes. Interest-free loans to employees arranged with the employer, or a company in the employer's group, are outside it.
• Registered social landlords. Interest-free credit for goods or services a social landlord provides to its tenants, leaseholders or shared owners is outside it.

An exemption from regulation is not an exemption from everything else. Consumer law, the Consumer Credit Act 1974 where it applies, and the financial promotion rules below still need attention.

Financial promotions: what merchants still carry

This is the point most retailers miss. Before Regulation Day, introductions to interest-free credit sat inside an exemption in article 15 of the Financial Promotion Order. The 2025 Order removed that exemption for regulated deferred payment credit. The result, as the Order's explanatory note puts it, is that an unauthorised merchant's promotions of a third-party lender's BNPL product must be approved by an FCA-authorised firm under section 21 of FSMA.

In practice the approver is usually the lender. Approval covers checkout banners, product page messages ("pay in 3"), basket and email copy, social media and in-store displays. A sensible operating model is:

• One register of every BNPL message the merchant uses, with the date approved and by whom
• A rule that new copy goes live only after lender approval
• A review whenever the lender changes its terms, fees for missed payments or eligibility
• A named owner in marketing or legal for the register

Marketplaces and platforms: three questions

Marketplaces often sit between several sellers and several finance providers, so the answer turns on the actual contracts. Three questions decide it.

Who sells the goods to the customer? If third-party sellers are the suppliers and the marketplace provides the credit, the marketplace is a lender in a regulated agreement and needs permission.

Who provides the credit? If an authorised lender provides it and the marketplace only displays the option and passes the customer through, the marketplace is broking, which is excluded.

Who carries the credit risk and collects the instalments? A business that funds the purchase, takes the credit risk and collects repayments is usually the lender, whatever the contract calls it. The activities decide the answer, not the labels.

A marketplace that wants to keep the economics of lending without holding permission can partner with an authorised lender. A marketplace that wants control of underwriting and customer data will usually need its own FCA consumer credit authorisation for lending.

Checkout and payment providers

Payment service providers, orchestration layers and checkout platforms add instalment options for thousands of merchants. If the provider only connects a third-party lender, it is broking and excluded. If it lends from its own balance sheet, or funds the merchant at checkout and collects instalments from the customer, it is a lender and needs permission.

Providers that already hold payment institution or e-money authorisation should note that those authorisations do not cover consumer credit lending. They need a Part 4A permission for lending under FSMA as well. Our licensing and authorisation team scopes these models product by product.

If the temporary permissions regime was missed

Registration for the temporary permissions regime closed on 1 July 2026. A lender that did not register, and did not already hold consumer credit lending permission, cannot enter into new deferred payment credit agreements. The FCA said in PS26/1 that doing so is a criminal offence from Regulation Day. Agreements made in breach of the general prohibition are also unenforceable against the customer under section 26 of FSMA.

Firms that are in the regime have a separate deadline. Their last application date is the day six months after 15 July 2026, so mid-January 2027. If they do not apply by then, their temporary permission ends the next day. Our existing guide to BNPL FCA authorisation for 2026 and 2027 covers the lender application in detail.

A checklist for merchants and platforms

• Map every instalment product you offer: who lends, who supplies, and whether any fee or interest applies
• Confirm each lender is authorised or listed in the temporary regime on the FCA BNPL page, and diarise mid-January 2027 for any lender relying on a temporary permission
• Put every BNPL promotion through lender approval and keep the approval record
• Check your complaints and customer service routes so customers reach the lender quickly
• If you fund instalments yourself for other sellers' goods, treat the activity as lending and apply for permission before you continue
• If you run your own interest-free credit for your own goods, keep it free of fees and interest, or apply for limited permission before you add a charge

For the wider rules that apply once a firm is authorised, see our guide to buy now pay later regulation in the UK and our consumer credit sector page.