To The Moon

BNPL: From Wild Growth to Being Scrutinized—Why Is It Still Rising Under Tighter Regulation?

$Affirm Holdings, Inc.(AFRM)$   ' share price surged recently after it renewed a five-year partnership with Amazon. Changes in BNPL regulation this year and the move to include BNPL in credit scoring systems are having a profound impact on the industry.

Regulatory trends—easing federal pressure, but increasingly fragmented oversight

Toward the end of the Biden administration, the CFPB sought to regulate BNPL in a “credit card–like” manner. In May 2024, the CFPB issued an interpretive rule finding that certain BNPL products offered through electronic accounts trigger key rights and obligations under the credit card framework, with an emphasis on handling disputed transactions and the pathways for returns and refunds. Previously, even when consumers returned goods or believed a transaction was problematic, BNPL payments might still be debited on schedule, late fees could accrue, and refunds could become tangled—for example, mismatches between merchant refunds, repayment obligations, and debit schedules. The CFPB has publicly stated that the lack of dispute protections can make billing issues “messy.”

After Trump took office, the CFPB quickly cooled on that BNPL approach: in May 2025, the agency made clear it would not prioritize enforcement based on the 2024 BNPL interpretive rule.

Even so, while pressure has eased at the federal level, compliance risk has not disappeared; instead, it has shifted upward and become more fragmented at the state level. In May 2025, New York State passed legislation establishing a licensing and regulatory framework for BNPL providers, with required disclosures and business rules—widely seen as the most systematic BNPL-specific legislation at the state level to date.

Congress has also stepped in to apply pressure. For example, in November 2025 the Senate Banking Committee sent a letter to Affirm requesting information on BNPL and related loans, signaling ongoing political interest that could spur legislation or state-level action.

Abroad, the EU's revised Consumer Credit Directive brings BNPL under the consumer credit regulatory framework and mandates that BNPL credit data be connected to member states' credit scoring systems. Member states must transpose the directive into national law by November 20, 2025.

BNPL incorporated into credit scoring

This year, BNPL-related data has finally been incorporated into credit scoring systems. In June 2025, FICO launched FICO Score 10 BNPL specifically to include BNPL data in its scoring methodology.

This move could have positive effects:

1. Previously, the lack of inclusion could lead to consumer over-borrowing, which—if it scaled—might create risks at both personal and societal levels. With BNPL data now part of scoring, consumers may use BNPL more prudently, reducing over-borrowing risk.

2. Consumers with strong credit histories tend to prefer credit products that help build or maintain their scores. Before inclusion, this group might have avoided BNPL; now BNPL may be more attractive to prime customers.

3. Some BNPL platforms have had relatively high bad-debt rates, as consumers without credit scores could abuse the service. Including BNPL in scoring should help lower default rates.

4. The BNPL platform is expected to collaborate with more companies that adhere to strict compliance requirements.

However, the BNPL segment is not without risks

I needs to pour some cold water on this: In partnerships with large retailers, BNPL providers may be at a disadvantage. Retail platforms want to expand supply and keep multiple BNPL options, which can push BNPL into commoditized, undifferentiated competition. As BNPL becomes more common on major platforms, bargaining power remains with those platforms.

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