Buy now, pay later
Also known as: BNPL, Pay Later, Pay in instalments
Buy now, pay later is a form of credit that lets a buyer receive goods or services now and pay over time, often in instalments. In the EU, the revised Consumer Credit Directive (EU) 2023/2225 brings buy-now-pay-later schemes within its scope for consumers.
Last reviewed
Example
Illustrative scenario. A shopper chooses to split a purchase into three instalments at checkout. The seller is paid at once by the provider, and the shopper repays the provider.
Every checkout has a moment of hesitation. Buy now, pay later is a bet that splitting the price makes the hesitation go away.
The idea
The buyer gets the goods now and repays over time. The mechanics vary by provider, and this entry describes the category and not any one product. In a common model the provider pays the seller and the buyer repays the provider, but the arrangements differ, so read the contract.
Where the rules are going
Older EU rules left much of this out. The 2008 Consumer Credit Directive excluded credit under EUR 200 or over EUR 75,000 (Article 2(2)(c)). It also excluded credit free of interest and other charges, and credit repayable within three months with only insignificant charges (Article 2(2)(f)). The European Commission says the new Consumer Credit Directive "is broader in scope" than before, applying to credit agreements below the old EUR 200 threshold, and that it applies to so-called "buy now, pay later" schemes. The Directive is (EU) 2023/2225. Member states apply it from 20 November 2026 (Article 48). It still excludes some supplier-only deferred payments (Article 2(2)(h)): interest-free, no third party offering credit, paid within 50 days, or within 14 days for large online sellers. Check your country's implementing law before you offer it.
What it changes for the merchant
BNPL is usually an extra choice at checkout, added through a payment service provider. Do not assume that a refund, a dispute like a chargeback or your payout timing work as they do for cards. Ask the provider.
The customer splits the price. You still pay to offer the split.