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The EU has passed BNPL rules. Now the real work starts…

September 12, 2023




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On 12 September, EU policymakers approved updated rules for consumer credit, including Buy Now, Pay Later (BNPL) products, the so-called EU Consumer Credit Directive (CCD). At Klarna, we support these new rules as they raise standards and enhance consumer protections. However, we believe more can be done to protect consumers as the CCD is implemented at the national level. In short, this is Klarna’s view on the Directive and its implementation across member states:

Protect consumers by giving them choice
We support BNPL regulation and emphasize the importance of prioritizing consumer well-being during the implementation of the CCD. One notable improvement in the updated CCD is the introduction of a proportionate regime for short-term interest-free credit, ensuring effective consumer protection. This empowers consumers to choose innovative, low-risk products instead of traditional, higher-cost credit options like credit cards.

Safeguard access to affordable credit
Some pre-contractual information requirements, like standardized APRs for interest-free, short-term credit , may be unnecessary and repetitive. Bombarding consumers with unhelpful information prevents them from engaging with what truly matters. Take for example the regulations which require websites to display cookie disclaimers. A recent academic paper found that disclaimers had no effect on consumer’s attitudes to privacy; in fact, consumers “
got even more accustomed to the use of cookies”. Regulation was introduced, website owners ticked the box, lawyers and compliance consultants got rich, but the effect on consumers was the precise opposite of that intended. If BNPL regulation is delayed in an effort to avoid this failure loop and instead make it more effective, then that is a good thing.

Safeguarding access to affordable and transparent credit options for consumers is crucial. Encouraging competition and innovation among providers allows for easy switching from high-cost, unscrupulous credit sources to low-risk, consumer-centric alternatives.

Close loopholes
As Member States transpose the CCD into national law, it's crucial for them to honour their commitment to enhancing consumer protection. Loopholes in the CCD must be addressed, and the framework should be extended to cover all BNPL services. Granting exemptions to major online retailers, lacking credit expertise, from essential consumer protection provisions like creditworthiness assessments, undermines consumer protection and contradicts the spirit of the Directive. Our message to national regulators is clear: same activities, same risk, same rules.

Work together to improve consumer choice
Poor implementation risks weakening consumer protection and confusion, particularly as BNPL services offered by retailers are excluded from the CCD. National policymakers should coordinate their implementation efforts to avoid significant differences between countries, which could distort competition and limit consumer choice across borders. While the CCD strives to close regulatory loopholes, poor legal drafting may result in varied interpretations at the Member State level, potentially leading to worse outcomes for consumers. As a European company with a global outlook, we strongly support further harmonization in the EU consumer credit market. We urge policymakers not to settle for minimum requirements that may fragment the credit market and reduce overall consumer protection.

Protect in proportion to risk
We urge European national regulators to maintain the principle of proportionality and establish a level playing field for all BNPL service providers, irrespective of whether they are third-party technology companies or retailers themselves, when transposing EU rules into national law.

In conclusion, Klarna calls upon national regulators across Europe to uphold the principle of proportionality and maintain a level playing field for BNPL providers alongside other credit providers during the transposition of EU rules into national law. Together, we can unlock opportunities and build a consumer credit landscape prioritizing transparency, fairness, and innovation.