States lean in on payments plays

State governments are no longer waiting for federal action to regulate the Buy Now, Pay Later (BNPL) industry. As federal oversight remains stalled in court or slow to develop, states like California are leading the charge by treating BNPL providers as traditional lenders. For your business, this means the 'wild west' era of unregulated point-of-sale credit is closing fast. You should expect a patchwork of different rules depending on where your customers live. Regulators are primarily focused on consumer protections. They want to ensure clear fee disclosures, easy dispute resolutions, and proper credit reporting. If you offer BNPL, your lending partners may soon require more rigorous data collection at the checkout counter to satisfy state laws. This shift could impact your conversion rates if the application process becomes more friction-heavy. However, it also adds a layer of legitimacy to these products that may build long-term trust with hesitant shoppers. Operators should stay in close contact with their financing partners to ensure they are compliant with local laws. The cost of compliance is rising for lenders, which could eventually lead to changes in merchant discount rates or shifts in which lenders operate in specific states. Keep a close eye on California and New York, as their legislative moves typically set the standard for the rest of the country.

Source: Payments Dive

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