New York Moves Sweeping BNPL Regulation Closer to Implementation

New York regulators moved the state’s sweeping buy now, pay later (BNPL) law closer to implementation with a proposed rule that would regulate how consumers manage these loans through lenders’ websites and mobile applications.

The new proposal builds on earlier rules governing the cost and underwriting of BNPL loans.

The New York Department of Financial Services issued the proposal July 15, following a preliminary version released in February. According to a Tuesday (Aug. 18) analysis by Mayer Brown, the new version narrows several earlier provisions governing interest calculations, notices and periodic statements. Yet it adds a potentially consequential requirement for lenders to provide consumers with a “reasonably accessible interface” for managing and repaying their loans.

The proposal would implement New York’s enacted but not yet effective Buy Now, Pay Later Act, the analysis said. The law takes a broad approach, potentially subjecting FinTechs, bank partnership programs, certain banks and some secondary-market purchasers to licensing, supervision, disclosures, underwriting standards, servicing rules, privacy requirements and regulatory reporting.

Its coverage also extends beyond the interest-free pay-in-four products most commonly associated with BNPL. The resulting framework could affect an array of consumer financing programs that were not necessarily the original target of the legislation, according to the analysis.

Most covered loans would be subject to New York’s 16% civil usury ceiling. The proposed rule would determine what qualifies as interest exclusively under state banking law, rather than treating the federal Truth in Lending Act’s definition of a finance charge as an example, the analysis said.

Interest would include amounts charged as a condition of making or originating a loan and charges associated with making an installment. The change should reduce potential confusion and conflicts between federal and New York calculations, per the analysis.

New York’s action reflects a broader movement toward state regulation as the federal approach remains unsettled. The Consumer Financial Protection Bureau in 2024 characterized many BNPL lenders as credit card providers, but withdrew that interpretive rule in 2025. Illinois has since enacted its own comprehensive licensing and supervisory regime, underscoring the prospect of increasingly fragmented state requirements.

Federal Regulation Z would remain relevant for disclosures, however. Required pre-transaction and post-transaction statements of a loan’s finance charge and annual percentage rate would be calculated under the federal regulation, the analysis said.

The proposal would simplify payment notices by prohibiting late charges unless a lender provides at least seven days’ advance notice of the due date, regardless of the billing cycle’s length. Notice could not be delivered more than one statement cycle in advance, according to the analysis.

Periodic statements would have to be delivered “promptly” after the previous cycle ends, replacing an earlier provision requiring delivery at least 14 days before payment is due, the analysis said. The seven-day minimum notice would still effectively establish an outside deadline.

For each loan, the newly required consumer interface generally would display the total balance, amount currently due, overdue amounts, next payment date and amount, number of remaining installments, annual percentage rate, any variable base rate and whether the obligation is secured. It must also provide other material information consumers would reasonably need when deciding how to allocate a payment, according to the analysis.

Compliance could therefore require redesign of lenders’ apps, websites and payment architecture, particularly for platforms that automate repayment or give consumers limited control over how payments are distributed.

The proposal drops specific restrictions on soliciting tips or gratuities that appeared in the preliminary rule. Tipping practices would nevertheless remain subject to federal and state prohibitions against unfair, deceptive or abusive conduct, an issue already attracting scrutiny in the earned wage access market, the analysis said.

The rule also adjusts late fee restrictions, payment allocation procedures, capital standards and surety bond requirements. A purchase-money mortgage secured by residential real estate would be expressly exempt, per the analysis, which said the exemption is largely a clarification because the statute already concerns financing for goods and services.

Comments on the New York proposal are due Sept. 14. Final rules would become effective 180 days after publication, and nonexempt lenders would then have 45 days to apply for licenses, the analysis said.

In the meantime, providers face a clear signal to begin reviewing their product structures, pricing, disclosures and digital servicing systems.