Trade groups knock BNPL rules

New York is pushing for stricter oversight of Buy Now, Pay Later (BNPL) providers, and industry trade groups are sounding the alarm. The proposed rules would require BNPL lenders to obtain state licenses and would grant the state power to cap fees and interest rates. While regulators aim to protect consumers from 'debt traps,' industry advocates like the American Fintech Council argue these rules are too heavy-handed. For retailers, this is a warning sign that the 'wild west' era of frictionless credit is ending. If these rules pass, New York merchants could see a significant drop in consumer purchasing power. Stricter licensing and fee caps often lead lenders to tighten their approval algorithms. This means customers who previously qualified for a 4-pay plan at your checkout might be declined under the new standards. Furthermore, the cost for lenders to operate in New York will rise, which could eventually result in higher merchant discount rates (MDR) for store owners. This isn't just a New York problem. As the first major state to move toward a formal licensing framework, New York is setting a template that other states are likely to follow. If you rely heavily on BNPL for high-ticket items, now is the time to audit your financing stack. Diversifying your lender partners will ensure that if one provider pulls back due to regulatory pressure, your customers still have options to complete their purchase.

Source: Payments Dive

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