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EU Overhaul Set To Reclassify BNPL As Consumer Credit On Nov. 20

Germany is setting the bar for affordability checks, with providers warning of red tape.

Overview

  • From November 20, 2025, even interest‑free purchases under €200 and short‑term plans will count as consumer credit, requiring mandatory creditworthiness assessments.
  • Lenders must provide standardized pre‑contract information, comply with caps on late fees and interest, and honor a 14‑day withdrawal that voids the installment credit.
  • Checkout processes will ask for more data and may slow to minutes rather than seconds, and customers with multiple active BNPL agreements could be refused.
  • The Bundestag is currently transposing EU 2023/2225 into national law, with a requirement for “proportionate” checks that leaves scope for interpretation.
  • Consumer advocates at VZBV seek stricter vetting and a signature to prevent “debt by click,” while PayPal deems thorough checks disproportionate and Klarna favors alternative‑data reviews, citing counseling cases of rapid over‑indebtedness among young users.