Millions of shoppers using BNPL services will be better protected by new rules that have now come into force.

The government says they deliver on its commitment ‘to end the Buy Now, Pay Later Wild-West’. 

Buying items with providers like Klarna, PayPal or Clearpay can be a useful tool to help people manage their finances, allowing consumers to spread the cost of purchases interest-free, typically at the point of online checkout. 

However these users have had fewer rights than someone buying the same item with a credit card or a personal loan when seeking a refund after buying faulty goods.

These products will now be regulated by the Financial Conduct Authority (FCA), giving consumers protections in line with other forms of credit. 

Under the new rules, providers must also carry out affordability checks before offering credit, meaning no one should be borrowing what they cannot realistically afford to repay, helping people avoid getting into avoidable, unaffordable debt.

And anyone who falls into financial difficulty will be directed towards debt advice and support first, rather than being immediately handed to a debt collector.