New York, Oregon Tighten BNPL Licensing Rules

Buy now, pay later products let consumers split purchases into installments, often marketed as interest-free alternatives to credit cards. Oregon regulators view those arrangements as consumer lending even when providers describe them as nonrecourse or charge no interest, fees or other costs at checkout. The classification matters because it subjects nonbank BNPL companies and service providers to state licensing, supervision and consumer-protection rules.

The Oregon Department of Consumer and Business Services’ Division of Financial Regulation proposed the guidance in June 2026, directing providers to apply through the Nationwide Multistate Licensing System. Loans of $50,000 or less due within 60 days require a payday lending license, while longer terms require a consumer finance license. The agency accepted public comments through 5 p.m. on July 17, 2026, before finalizing the bulletin.

Buy Now Pay Later (BNPL) “Pay in 4” plans typically split a purchase into no more than four installments over six to eight weeks, with an average loan size of $135, according to the Financial Technology Association. The product has gained importance as households contend with cost-of-living pressures and high credit-card interest rates. Supporters say its fixed schedules and lack of revolving balances offer flexibility, while its growth has sharpened the policy debate over access, underwriting and consumer safeguards.

On July 22, the FTA released a HarrisX survey of 1,890 U.S. adults conducted online from June 18 to June 23, 2026. It found 91% of BNPL users and 77% of all adults viewed the plans as a net positive, while 87% of users said they helped reduce reliance on high-interest credit cards. Some 88% of users, versus 75% of Americans overall, said elected officials should protect access. The industry group said it supports appropriate regulation that preserves payment flexibility while maintaining consumer protections.

Buy now, pay later (BNPL) lets shoppers receive goods immediately and repay on a fixed schedule, often without interest. The dominant “Pay in Four” model takes 25% upfront and three equal payments every two weeks. Oregon regulators view these products as installment loans rather than retail layaway arrangements, making their treatment under existing lending laws important for consumer protections and the compliance costs facing providers serving residents of the state.

The Oregon Department of Consumer and Business Services’ Division of Financial Regulation proposed a bulletin in June requiring nonbank BNPL lenders and service providers to secure a payday and/or consumer finance license through NMLS, depending on repayment length. Oregon’s consumer finance license covers loans of $50,000 or less with terms longer than 60 days. Comments closed at 5 p.m. on July 17. The American Fintech Council said on July 20 that it opposed applying rules designed for high-cost payday lending and urged a formal, stakeholder-driven rulemaking process.

Buy now, pay later is evolving from a single-provider relationship into a financial toolkit for U.S. consumers. PYMNTS Intelligence said shoppers increasingly compare BNPL services by loan size, repayment period, interest rate, fees and merchant availability. That flexibility gives borrowers more control over cash flow, but fragmented accounts can leave lenders with an incomplete view of customers’ obligations while increasing underwriting, identity-theft and application-fraud risks.

A PYMNTS report published July 20, 2026, drawing on 10 surveys of U.S. adults between April 2025 and May 2026, found that 74% of BNPL users had used at least two providers in the previous three months as of May, up from 68% in April 2025. Some 49% used two or three providers and 25% used four or more. Affirm led with 45% usage, followed by Klarna and PayPal Pay Later at 44% each and Afterpay at 42%. The report disclosed no aggregate transaction or loan amount.

Buy now, pay later services allow consumers to pay in installments but can increase debt risks because of inadequate disclosures and the accumulation of multiple loans. Illinois lawmakers have therefore introduced dedicated legislation. If signed by the governor, it would make Illinois the second U.S. state to enact legislation regulating the BNPL industry, potentially influencing the regulatory approach of other states.

The Illinois legislature recently passed the Buy Now, Pay Later Loan Consumer Protection Act, which is awaiting the governor's signature. The bill would require providers to register with state regulators, disclose loan terms and assess consumers' ability to repay. However, reports have not specified a signing deadline, effective date or fine amounts, and both consumer advocacy groups and industry organizations are seeking further amendments.

Buy now, pay later (BNPL) services let consumers pay for individual goods or services in installments, but they are not necessarily subject to the same interest-rate, credit-reporting and privacy rules as traditional consumer loans. The New York State Department of Financial Services (DFS), acting under legislation included by Governor Kathy Hochul in the fiscal 2026 budget, has proposed a licensing and oversight regime under a new Part 423 of Title 3 of the New York Codes, Rules and Regulations.

DFS released the proposal on February 23, 2026, opening a 10-day pre-proposal comment period through March 5. A separate 60-day comment period will begin after formal publication in the State Register. The proposal would prohibit convenience fees, cap the safe harbor for late fees at $8, and require disclosure of loan terms, dispute resolution procedures and protection of personal data. The rules would take effect 180 days after adoption.

Buy now, pay later, or BNPL, allows consumers to receive goods upfront and pay in installments, often through a four-payment, interest-free plan. But standards governing disclosures, refund disputes, credit reporting and fees remain inconsistent. On May 6, 2025, the U.S. Consumer Financial Protection Bureau said it would not prioritize enforcement of related Regulation Z requirements. It then withdrew its 2024 interpretive rule on May 12, increasing the importance of state efforts to fill the regulatory vacuum.

The New York State Department of Financial Services on February 23, 2026, unveiled proposed 3 NYCRR Part 423, which would require BNPL providers to obtain licenses, assess borrowers’ ability to repay, disclose credit-reporting practices, and establish dispute-resolution and data-protection mechanisms. The safe-harbor cap for default fees would be $8, with repeat charges prohibited for a single incident. The proposal initially opened for a 10-day comment period, followed by a separate 60-day public-comment period after formal publication. It would take effect 180 days after adoption and publication.