BNPL Regulation 2026: Klarna, PayPal & Co Under Supervision
Starting November 20, 2026, strict new rules apply to "Buy Now Pay Later" services. EU Directive 2023/2225 brings comprehensive changes for Klarna, PayPal Pay Later, Riverty, and all other BNPL providers.
Key Points at a Glance:
- - EU Directive 2023/2225 takes effect on November 20, 2026
- - Credits under 200 euros now fall under full regulation
- - Mandatory credit check before every BNPL use
- - 14-day withdrawal right also for small loans
- - Warning notice: "Attention! Borrowing costs money!"
- - Over 50,000 credit intermediaries need new licenses
Table of Contents
The era of unregulated "Buy Now Pay Later" services is coming to an end. With EU Consumer Credit Directive 2023/2225, which takes effect on November 20, 2026, providers like Klarna, PayPal Pay Later, and Riverty will be placed under strict banking supervision for the first time. Germany's new Consumer Finance Supervision Act (AbsFinAG) implements the EU requirements into national law, bringing far-reaching changes for consumers and the entire industry.
1What is Buy Now Pay Later (BNPL)?
Buy Now Pay Later refers to payment methods where consumers receive goods immediately but payment is deferred. Typical BNPL options include:
Invoice Payment
- - Payment after 14-30 days
- - Classic "pay by invoice"
- - Standard at many online shops
Installment Payments
- - Split into 3, 6, or 12 installments
- - Often interest-free for short terms
- - Flexible amounts
The Problem: Lack of Regulation Until 2026
Until now, BNPL services under 200 euros were exempt from the EU Consumer Credit Directive. This led to: no credit checks, no warning requirements, no withdrawal rights, and increasing debt, especially among young people.
2EU Directive 2023/2225: The New Rules
Effective Date: November 20, 2026
EU Consumer Credit Directive 2023/2225 was adopted on October 30, 2023 and must be implemented in all EU member states by November 20, 2026. Germany has created the Consumer Finance Supervision Act (AbsFinAG) for this purpose.
200 EUR
Old threshold eliminated
All amounts regulated
14 Days
Withdrawal right
also for small loans
100%
Mandatory credit check
before every use
Key Changes at a Glance
No more exemption for small loans: The previous 200-euro threshold is completely eliminated
Mandatory credit check: Creditworthiness must be verified before every BNPL use
Warning notice requirement: "Attention! Borrowing costs money!" must be clearly displayed
14-day withdrawal right: Consumers can revoke the credit agreement
BaFin supervision: All BNPL providers are subject to banking supervision
3German Implementation: AbsFinAG
The Consumer Finance Supervision Act (AbsFinAG) is Germany's implementation of the EU directive. It regulates for the first time the supervision of consumer finance providers - meaning all forms of installment purchases and deferred payments.
Key Provisions of AbsFinAG:
For Providers:
- - BaFin authorization required
- - Capital requirements
- - Reporting obligations to supervisory authority
- - Documentation requirements
For Consumers:
- - Transparent cost information
- - Protection against over-indebtedness
- - Clear contract terms
- - Complaint rights
4Mandatory Credit Checks: What's Allowed and What's Not
Permitted Data Sources
Credit Bureaus
- - SCHUFA (Germany)
- - Creditreform
- - infoscore (Arvato)
- - Buergel
Self-Declarations
- - Proof of income
- - Employment status
- - Existing liabilities
- - Bank statements (voluntary)
Prohibited Data Sources
The EU directive explicitly prohibits the use of certain data:
Social Media
- X Facebook activities
- X Instagram profiles
- X Twitter/X posts
- X LinkedIn connections
Sensitive Data
- X Health data
- X Political opinions
- X Religious affiliation
- X Sexual orientation
Important: GDPR Compliance
Credit checks must be fully GDPR compliant. Consumers have the right to request information about the data used and to have incorrect entries corrected.
5New Consumer Rights from November 2026
14-Day Withdrawal Right
You can cancel any BNPL contract within 14 days without giving reasons. This also applies to small amounts under 200 euros.
Transparent Cost Information
Before signing, all costs must be clearly and understandably presented: effective interest rate, total amount, installment amount, and term.
Mandatory Warning Notice
"Attention! Borrowing costs money!" - This or a similar warning must be clearly visible with every BNPL offer.
Right to Early Repayment
You can repay early at any time - without prepayment penalties. With early repayment, proportional interest is refunded.
Complaint Right with BaFin
In case of violations, you can contact the Federal Financial Supervisory Authority (BaFin) directly. The authority can impose fines.
6Affected Providers: Who Must Change?
Nearly all BNPL providers in Germany are affected. They must adapt their business models and apply for BaFin authorization.
Market leader in Germany
Invoice & installments
Pay Later & installments
Wide merchant acceptance
Formerly AfterPay
Invoice payment specialist
Other Affected Services:
7New Licensing Requirements for Credit Intermediaries
Over 50,000 Affected in Germany
The new Section 34k of the Trade Regulation Act (GewO) introduces a new licensing requirement for credit intermediaries. Affected are not just financial advisors, but also merchants offering BNPL services.
Who Needs the License?
- - Credit intermediaries and brokers
- - Financial advisors with credit brokerage
- - Online retailers with BNPL integration
- - Credit comparison portals
Requirements:
- - Proof of expertise
- - Professional liability insurance
- - Orderly financial circumstances
- - Reliability check
Transition Periods Apply
Existing credit intermediaries have a transition period to apply for the new license. Those already licensed under Section 34c GewO (real estate loan intermediaries) may be able to continue their activities under certain conditions.
?Frequently Asked Questions (FAQ)
Can I still use Klarna and Co. after November 2026?
Yes, BNPL services are not being banned. However, they are subject to stricter rules. You will undergo a credit check before using them and receive more consumer rights such as the 14-day withdrawal right.
Will BNPL services become more expensive?
Possibly. The higher regulatory requirements cause costs that providers may pass on. On the other hand, costs must now be transparently disclosed - hidden fees will become more visible.
What happens if I don't pass the credit check?
Then the BNPL option will be denied to you. You can then pay with other payment methods (prepayment, credit card, instant transfer). The rejection is not reported to credit bureaus - only actual credits are recorded.
Does the regulation also apply to 0% financing in retail?
Yes. Interest-free installment payments in retail stores (e.g., at MediaMarkt, Saturn, furniture stores) also fall under the new rules. A credit check will be mandatory here as well.
Will my social media data be used for credit checks?
No. The EU directive explicitly prohibits the use of data from social networks for creditworthiness assessments. Only traditional credit bureaus and your own declarations may be used.
!Conclusion: What Does This Mean for You?
The BNPL regulation 2026 brings more transparency and consumer protection. As a consumer, you benefit from clearer cost information, withdrawal rights, and protection against over-indebtedness. The credit check may seem annoying, but it protects against uncontrolled debt.
Benefits for Consumers:
- - 14-day withdrawal right
- - Transparent cost information
- - Protection against over-indebtedness
- - No use of social media data
- - Complaint right with BaFin
What You Should Keep in Mind:
- - Credit check before every BNPL use
- - Take warning notices seriously
- - Check total costs
- - Only buy what you can afford
- - Keep track of credit bureau entries
Stay Financially Well-Positioned
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