Germany to tighten "buy now, pay later" rules from 2026

Germany's Bundestag has passed new regulations that will take effect on November 20, 2026, subjecting "buy now, pay later" (BNPL) services to the same rules as traditional consumer loans. This national implementation of the EU Consumer Credit Directive (2023/2225) will require BNPL providers to conduct more stringent creditworthiness assessments to verify customers' repayment ability.

The changes are primarily aimed at protecting younger consumers who may lose track of their liabilities when entering into multiple small BNPL agreements. While individual purchase amounts might be low, their accumulation can lead to significant financial difficulties. The new legislation also closes a regulatory gap that previously allowed some interest-free or short-term BNPL models to fall outside the scope of consumer credit law.

BNPL providers will now need to perform a more comprehensive credit assessment, which may extend beyond simple credit checks, particularly for larger sums. Data protection rules will also be tightened, prohibiting the use of sensitive information, such as health-related data, in creditworthiness evaluations. Automated credit decisions without human review will no longer be permitted.

The regulations will also broaden the scope to include small loans up to €200, interest-free installment purchases, and short-term loans of up to three months that were previously exempt. Merchants will need to review their checkout processes, general terms and conditions, and agreements with payment service providers to ensure compliance before the deadline. BNPL will remain an available payment option but must operate under the same regulatory framework as traditional installment loans.