New rules impose stricter affordability checks on buy now pay later

Shoppers using buy now pay later services are facing new background checks to test whether they can afford their purchases, BBC News reported. Lenders can now block purchases if a customer fails the affordability assessment. [1]

Buy now pay later is a form of short-term debt financing that lets consumers divide purchases into installment payments. Under the system, financiers pay merchants on behalf of shoppers, who then pay back the debt in equal payments over a set period. [3]

The service has been officially regulated since July, according to BBC News. Firms offering the payment option, including Klarna and Clearpay, must now receive approval from regulators to operate. [1]

BBC News reported that the regulatory oversight gives consumers increased access to refunds. Shoppers also gain access to independent rulings on complaints when problems occur with their transactions. [1]