The continued rise of Buy Now Pay Later

On 15 July 2026, Buy Now Pay Later in the UK steps inside the FCA’s regulatory perimeter and becomes just another regulated consumer credit product. Most coverage is treating that as the story. It isn’t.

 

Regulation ends the brand era and begins the infrastructure era for BNPL. The most consequential part, the part few BNPL providers have yet absorbed, is that the infrastructure to make BNPL truly channel-agnostic (approved online, tapped at any high-street till, with no new POS hardware, no staff retraining, and no new payment method to explain) is already built. It just hasn’t been put to work.

 

 

The brand era was a regulatory artefact

For most of the past decade, BNPL was differentiated by what it wasn’t. It wasn’t a credit card, it wasn’t a loan, it wasn’t subject to the same disclosures, affordability checks or redress arrangements as the consumer credit products it was quietly replacing. That difference came from the Article 60F(2) exemption in the Regulated Activities Order, which let interest-free, short-term instalment credit sit outside the Consumer Credit Act 1974 when offered by a merchant. The exemption created the space for a generation of brands (Klarna, Clearpay, PayPal Pay in 4) to build distinct products on top of a lighter regulatory footing. That gap closes on 15 July 2026. Lenders will need FCA authorisation, real affordability checks, Consumer Credit-style pre-contract disclosures, Section 75 joint liability and access to the Financial Ombudsman Service.

 

The product becomes safer for consumers, which is, on balance, good for the market: Clearpay research found that 71% of UK adults believe BNPL should be subject to financial legislation, and 48% would be more likely to use it once regulated. Trust is a growth lever. But the same regulation that builds trust also constrains the product-level difference that powered the brand era. After July 2026, the underlying consumer credit experience offered by a household-name BNPL app and the equivalent instalment product offered by a high-street bank converges. The "Klarna-ness" of Klarna gets harder to defend.

 

 

When products commoditise, value moves to distribution

This is a familiar pattern. Visa and Mastercard are not standalone consumer brands - neither card scheme actually issues cards; they are infrastructure, and the brand is largely a signal of merchant acceptance and customer recourse guarantees. Cards are generally co-branded and distributed by brands, sometimes consumer banks and at other times retail brands.

 

A big part of the brand value in cards sits with the distribution brand and is built on experience and channel, not just on the product itself. Music followed the same trajectory: once every catalogue was equally licensed, the value migrated to whoever owned the consumer’s daily listening moment, which is why Spotify and Apple Music captured the category rather than the labels. BNPL is about to walk the same path. The global BNPL market is projected to exceed $1tn by 2031, and 54% of UK adults already report having used a BNPL service in 2026, up from 42% a year earlier.

 

At those numbers, BNPL has stopped being a niche choice and started being a default consumer behaviour. When a default behaviour is regulated, the question for providers stops being "how do I make my product different?" and becomes "how do I make sure my product is available everywhere the consumer might need it?". Welcome to ambient credit: regulated, trusted financing that appears at the moment of need, in whatever channel the consumer is already in, with no separate sign-up.

 

 

High-street gap hints at where this is going

If the BNPL market were already in the ambient era, you would expect to see it everywhere consumers transact. You don’t. UK retail is currently growing at 1.1% year on year against a twelve-month average of 2.3%, and retailers are scrambling for every conversion lever they can find. BNPL is one of the strongest available. Yet that uplift is almost entirely an online phenomenon.

 

Walk into any UK high-street store, supermarket, garden centre or department chain, and the BNPL options that converted you online are essentially absent at the till. The reason isn’t a lack of consumer interest, regulator reluctance or retailer hesitation. It’s structural.

 

BNPL providers built their stacks for web checkout flows: redirect, approve, return, complete. None of that translates to a contactless terminal, where the consumer expects to tap a phone or a card and walk away in three seconds. The gap between online BNPL and physical retail is the clearest possible evidence that the brand era has hit its ceiling. A truly ambient credit product would already be in every till. The fact that it isn’t tells you exactly which capability gap defines the next phase of competition.

 

 

What ambient credit requires

The drive for physical retail to support a credit product that will increasingly be expected by customers is one thing - making it happen is another.  To make BNPL accessible at every till, providers will need to provide payment credentials that behave exactly like any other contactless card: tokenised, scheme-routed, terminal-accepted, and provisioned into Apple Pay or Google Pay at the moment of approval.

 

Building that credential from scratch is a multi-year programme. It requires direct or sponsored Visa and Mastercard scheme membership, additional licences to operate payment services, a card processor, a tokenisation service provider and wallet provisioning software, integrations with Apple and Google’s wallet provisioning capabilities and certification by the wallet schemes. None of these requirements are part of a lending business’s core competency. Creating retail-ready solutions from scratch takes years and millions of pounds of investment.

 

This is precisely the gap that embedded finance closes. A BNPL provider keeps the lending licence, the credit decision, the affordability and forbearance machinery, and the customer relationship. Everything else (the issuing, the wallet provisioning, the safeguarded funds, the scheme membership) is delivered as infrastructure.

 

The result is operationally simple. A consumer applies for BNPL at checkout, online or in-store. Approval triggers a virtual card, provisioned in real time into the consumer’s mobile wallet. The shopper taps to pay at any existing contactless terminal in the country. No new POS hardware. No staff retraining. No new payment method to explain to the customer. No retailer integration project. The transaction routes through the same rails as any other card payment, with the BNPL provider invisible at the till. That invisibility is exactly what "feature, not brand" requires.

 

The same logic applies to the new entrants the regulation will pull into the market: banks looking to extend instalment products, retailers wanting white-label BNPL inside their own apps, and platforms adding embedded credit to their existing customer base. None of them wants to become a card issuer. All of them need their lending capability to show up where their customers actually shop.

 

 

Retail, banks and BNPL incumbents

Each constituency now has a clear question to answer. Retailers should stop treating BNPL as an online checkout button supplied by a third party and start asking partners how they will show up at the till. After July 2026, that question becomes commercial as well as operational, because the regulated BNPL providers carrying real compliance costs will only justify their economics if they can demonstrate channel reach. BNPL incumbents need to decide whether they’re defending a brand or building a distribution moat. The brand defence gets harder every year as the regulated product converges. The distribution moat is winnable, but only by providers who treat issuing infrastructure as something to embed rather than something to build.

 

Banks and platforms entering the market should plan their stack around embedding from the start, because the unit economics of doing it any other way no longer add up under the new regulatory baseline. The deeper shift is that consumers will, slowly, stop noticing BNPL as a separate thing. Credit will be available where they already pay, in the wallet they already use, on terms they already trust because the regulator now stands behind the disclosures.

 

That is what ambient credit looks like in practice, and it’s the natural endpoint of a category that has finally been brought inside the regulatory mainstream. 15 July 2026 is not the day BNPL  will be regulated. It’s the day it stops being a destination and starts being infrastructure. The businesses that recognise that early will define the next decade of consumer credit.

 

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Alex Mifsud is CEO and co-founder of Weavr

 

Main image courtesy of iStockPhoto.com and vittaya pinpan