Next year promises to be a defining year for the UK’s buy now, pay later sector as the government confirmed in July new regulations will be enforced to better protect consumers from lending they possibly can not afford.
Ruth Spratt, VP and UK Country Manager at Affirm, writes for Payment Expert on why she believes late payment fees should become more visible to consumers, why BNPL operators should have models in place prepared for incoming regulations, and how UK regulations can help consumers make more informed lending decisions.
Buy now, pay later (BNPL) is growing fast, closely mirroring the trends we’re seeing in the wider fintech sector: consumer-focused regulation, intensifying competition for talent, and rapid product innovation.
As the public sector attempts to keep up, new regulation will play a particularly important role as a defining feature of the fintech industry’s 2026. This is especially true for the new BNPL regulations, which will raise the bar for how BNPL providers communicate with consumers, assess affordability, and manage short-term credit risk.
As expectations for stronger customer protections evolve into firm regulatory standards next year, clarity and transparency will become the defining features of responsible lending. Providers that have already built with the customer in mind are well-positioned for what comes next, while others face a steeper path.
The shift toward clear, modern credit
BNPL has moved firmly into the financial mainstream, reshaping how people access credit and manage their budgets. UK Finance data shows that a quarter of UK adults now use BNPL, with adoption growing fastest among 55-64 year olds.
But younger adults remain the most confident adopters of new payment technologies, with more than one in three 25-to-34 year olds using BNPL in 2024. This generation has led every major payments innovation of the past decade, from contactless to digital wallets and now BNPL, pushing the industry toward more convenient and frictionless ways to pay.
We’re also seeing BNPL usage on the rise in middle and high income households. This reflects a consumer base that is confident, financially literate and intentional about how they budget. It’s a reminder that BNPL isn’t filling a gap, but serving as a modern alternative to traditional credit.
As BNPL adoption grows, so does responsibility
As BNPL becomes increasingly part of everyday spending, these products must deliver better outcomes for consumers. It is critical that the industry raises the bar for responsibly extending access to credit that improves the financial well-being of its customers, and not simply repackage the same tricks and gimmicks from credit cards with sleek new branding.
Late fees are the clearest example of where the industry can improve. Fundamentally, late fees represent revenue and profit for lenders that arise only when a customer is overextended, makes a mistake, or fails to absorb all of the lender’s fine print.
Research from the Lending Standards Board shows that 15% of BNPL users have incurred late fees. Only 52% of users are aware of late payment fees and just 50% knew how much these fees might be before they incurred them.
I’ve always believed that a model built on customers slipping up represents a misalignment of interests between lenders and borrowers. Affirm never charges any hidden or late fees.
For me, this isn’t just about compliance, it’s about values. If we say we’re here to help people manage their money more confidently, then all business models should reflect that. Regulation is finally catching up to embed those principles industry-wide, and that should be celebrated.
A global direction of travel
We’re not only seeing this shift in the UK. In the US, lawmakers and regulators are also asking providers to demonstrate exactly how they protect consumers, how they communicate costs, and how they ensure repayment is manageable.
I welcome that scrutiny. It creates consistency, strengthens trust and, ultimately, raises standards across the board. Regulation should reward clarity not complexity, responsibility not shortcuts. The more global alignment we see, the easier it becomes for consumers to know what “good” looks like – no matter where they shop, live or borrow.
The question isn’t whether BNPL should be regulated, but how the industry can live up to its promise of providing a better alternative to other credit products.
A defining moment for the industry
As the UK brings BNPL under formal regulation next year, we’ll move into a new and more accountable chapter for consumer finance. For BNPL providers, it will be a turning point.
Those who invested early in transparency, predictability and strong underwriting will help shape what responsible lending looks like for the next decade. Those who rely on late fees or other gimmicks will need to rethink their models if they want to meet the level of protection and clarity that consumers expect.
The opportunity ahead
Next year represents an enormous opportunity – not only for the industry, but for consumers. Clearer rules will mean consumers can make more informed choices, and stronger protections build the trust that responsible lending relies on. A market built on transparency will always lead to better outcomes than one built on complexity.
As we go into 2026 and beyond, the real question isn’t whether BNPL will mature, it’s who will lead that maturity.
My hope is that, as regulation comes into force, we use this moment not just to comply, but to reset. To design credit that supports people’s lives rather than complicating them. To embrace underwriting that protects rather than exposes. And to prove that innovation and responsibility are not competing forces.
The future of BNPL won’t be defined by who can grow the fastest, but by who can grow responsibly.
