Changes to BNPL: Good for consumers, bad for business?
Buy Now Pay Later (BNPL) firms have become a staple payment option for cash-strapped Brits looking for ways to help them buy what they need during the ongoing cost-of-living crisis. It's therefore no surprise that 2 in 3 (64%) have used BNPL to make a purchase at some point. Until now, BNPL options have offered consumers a quick and easy way to access credit, helping them spread the cost of larger purchases, manage cashflow and avoid interest payments.
On the face of it, that sounds like great news for consumers. Many have often found it time-consuming, or in some cases impossible, to access the credit they need via other sources. This is particularly true for younger consumers, among whom BNPL use is even more prevalent.
However, the reality isn't one of complete utopia. The very ease and simplicity with which consumers have been able to access BNPL services has, in some cases, led to very real harm. Limited checks and balances have been in place, meaning consumers can very easily over-stretch themselves; and some of course have.
Next week BNPL providers will start being regulated by the Financial Conduct Authority (FCA), bringing some significant new requirements. These changes mean that providers will need to be authorised, that they will have to undertake affordability checks for every purchase and provide clear information about the terms upfront. The changes also offer consumers a formal route for any complaints.
Strong consumer backing, but awareness is shallow
Given the widespread use of BNPL services, it's perhaps no surprise that just over half of consumers (53%) are aware of the upcoming regulation. However, this drops sharply when it comes to understanding the specifics, with only 24% aware of the details.
This discrepancy highlights a clear knowledge gap; while the regulatory developments are generally known, the nuances that may materially impact consumer behaviour are yet to be fully realised and understood. This suggests providers and retailers still have work to do to improve awareness and explain what the changes mean in practice.
Consumers feel BNPL providers have a responsibility to ensure consumers understand how the service works and any risks involved, but 9 in 10 (91%) also agree that this responsibility is shared with the retailers where consumers access these services. Are retailers ready and able to meet consumer expectations? Whether retailers meet those expectations will become clear once the regulations take effect.
Despite limited understanding of the detail, customer sentiment towards the regulation is overwhelmingly positive. Nearly 9 in 10 feel positively about the upcoming regulations (88%) and believe that the new regulations will better protect consumers from financial harm (89%), ultimately leading consumers to trust BNPL services more (77%).
This suggests that consumers recognise the current potential risks associated with BNPL, such as overspending and debt accumulation, and are welcoming the safeguards that enhance responsibility and accountability.
Retailers are exposed: the commercial risk is real
So, while consumers are positive about the added protections, the potential impact on retailers is less positive. Quite simply, the introduction of the regulation is likely to dampen consumer spending. Just under half of consumers (46%) agree the new regulations will reduce the amount they spend. More than 2 in 5 (43%) agree the regulations will change their shopping behaviour, while the same proportion (43%) believe they will make it harder to use BNPL services when they need them.
In addition, if their BNPL application was declined, 1 in 5 (21%) would abandon their purchase; a huge loss to retailers at a time when many are already struggling. Retailers who rely more heavily on BNPL as a driver of conversion will be the hardest hit.
But it's not only about a squeeze on sales, reputational impact and increased costs are also on the horizon.
Just under half (47%) say if BNPL becomes harder to use, that they will feel more negatively towards retailers that offer it. Through no fault of their own, brands may see their hard-earned brand equity erode very quickly.
The changes could also increase costs by generating more contact with customer service teams. Around 1 in 8 consumers (12%) strongly agree they would contact the retailer if their BNPL application was declined during checkout. Retailers may therefore need to prepare for additional demand on customer support teams, alongside new and different customer queries once the regulations come into effect.
What does this mean for brands?
BNPL regulation is good for consumers, but only if brands help them understand it. For retailers, the winners will be those who treat the change not as a compliance update, but as a customer experience challenge.
Preparation will be the differentiator. Consumers already see retailers as responsible both for explaining the new regulations and supporting customers whose BNPL applications are declined:
Reach out to frequent BNPL customers in advance to raise awareness and set expectations. This should include signposting to information and support to minimise direct contact post changes.
Provide information and guidance at the checkout highlighting alternative payment options to help rescue sales that may otherwise be abandoned.
Brief your contact teams about the changes and provide clear customer-focused responses to potential queries and concerns.
Track reputational impact to help isolate any change in sales, experience or reputational metrics being caused by this external change.
Looking beyond compliance
Regulation may change how consumers use BNPL, but the bigger challenge for retailers is understanding how those changes affect customer behaviour, spending and trust. Organisations that test communications, monitor customer experience and track reputational impact will be in a far stronger position to respond than those relying on assumptions.
Our latest UK Cost of Living: Q3 2026 Outlook shows that while confidence has improved slightly, consumers remain cautious with their spending. Understanding how regulatory change interacts with wider economic pressures will be critical for retailers in the months ahead.
If you'd like to explore how changing consumer behaviour could affect your organisation or discuss how The Harris Poll UK can support communication testing, customer experience or reputation tracking, we'd be happy to talk.