Is buy now, pay later regulated in the UK?
Yes, since July 15, 2026. Under the FCA's PS26/1 rules, interest-free BNPL is regulated credit: lenders need authorisation and must check affordability, and customers can complain to the Financial Ombudsman Service. Klarna, Clearpay and PayPal lead the market.
In detail
Yes, since July 15, 2026. Under the FCA's rules, interest-free buy now, pay later is regulated consumer credit.
What changed
- Lenders need FCA authorization.
- They must run proportionate affordability checks.
- The Consumer Duty applies, and lenders must support customers in difficulty.
- Borrowers can complain to the Financial Ombudsman Service.
A large market
The UK is one of Europe's largest BNPL markets. According to UK Finance, 12.9 million adults, or 22%, used BNPL at least once in 2025, and 42% of them did so monthly or more often. The FCA puts deferred payment credit lending at more than £13 billion in 2024.
The main providers
Klarna leads with just over 11 million UK customers, followed by Clearpay and PayPal, which offers Pay in 3 and Pay in 30 Days. Home-grown players such as Zilch and neobank products complete the picture. BNPL is also merging with wallets: Klarna became available in Google Pay in the UK in February 2026.
What it means for payment operators
For operators serving UK merchants, BNPL now means working with FCA-authorized lenders and expecting affordability checks to decline some requests. Showing other methods when BNPL is refused keeps the sale.