Deferred Payment Credit (DPC), commonly known as Buy Now Pay Later, has become a familiar part of the retail checkout experience. For many consumer brands, it helps drive conversion, increase basket sizes and offer customers greater flexibility. But from 15 July 2026, the introduction of FCA regulation will change how these products are offered, creating new challenges and opportunities for both lenders and retailers.
Over the past few years, DPC has grown more popular for UK consumers looking to spread the cost of purchases and manage their monthly budgets. According to the Financial Conduct Authority (FCA) Financial Lives 2024 Survey, one in five adults (10.9 million) bought goods using DPC in the 12 months to May 2024, up from 17% (8.8 million) in 2022.
Until recently, DPC remained largely unregulated in the UK. As a result, consumers did not benefit from some of the protections associated with other regulated retail finance products, including affordability checks and access to independent dispute resolution. The new rules will introduce stricter affordability checks around how DPC is offered. In practice, this could mean fewer shoppers being approved, more steps at checkout, and a shift in how – and how often – people choose to use it.
For retailers, the challenge is not simply understanding the new rules but managing what comes next: balancing additional friction in the customer journey with continued customer demand for flexible ways to pay.
The retail finance model at the point of sale
For consumer brands, retail finance, including DPC, offers significant advantages, driving higher sales volumes, increasing order values and helping customers access greater payment flexibility. More commonly, brands partner with third-party financial institutions, which pay the retailer upfront on behalf of the customer and then collect repayment from the customer over time, often in instalments.
As DPC comes under FCA regulation, these partnerships will come under greater scrutiny. Retailers will need confidence that their chosen providers can meet new regulatory requirements while continuing to deliver a smooth customer experience and support commercial objectives.
What can we expect from the new requirements?
The new DPC regulations will establish clearer expectations for providers, with the FCA overseeing DPC activity across the market. As such, retailers need to ensure that any future third-party providers have obtained the necessary FCA authorisation and comply with the new rules, as will be required when the new regulations come into place. In addition, an FCA-authorised firm must approve DPC financial promotions.