EU Takes Aim at BNPL: CCD2 Credit Rules to Transform Instant Finance Across Europe

By Mark James, updated July 16, 2025

The European Union is rolling out sweeping new credit rules that will force Buy Now, Pay Later (BNPL) platforms and digital lenders to comply with the same transparency and affordability standards as banks. The revised Consumer Credit Directive – known as CCD2 – enters full force by late 2026, leaving platforms and retailers little time to adapt.

Formally adopted in October 2023, the Second Consumer Credit Directive (CCD2) replaces its 2008 predecessor to better reflect the modern digital credit landscape. The updated law expands regulation to nearly all non-mortgage loans up to €100,000, including BNPL, short-term microloans, credit lines, and even some types of crowdfunding finance. Crucially, it removes the old €200 minimum threshold for oversight, meaning even small loans and interest-free installment plans must meet the new standards. EU Member States must transpose CCD2 into national law by 20 November 2025. Enforcement begins one year later, on 20 November 2026, giving businesses a limited window to revamp legal and technical frameworks.
Source: Dentons

CCD2 for Providers and Users

The EU’s Consumer Credit Directive 2 (CCD2) is set to transform how BNPL providers operate across Europe. Platforms previously functioning in a lightly regulated space will now face strict compliance mandates. Chief among these is the need for robust creditworthiness assessments aligned with European Banking Authority (EBA) guidelines. Providers must evaluate a borrower’s income, debts, repayment history, and financial obligations, requiring new data-sharing frameworks and deeper ties with credit institutions across member states.

Compliance doesn’t stop there. CCD2 imposes tough transparency rules, mandating pre-contractual disclosures of costs, repayment terms, and consumer rights. These changes, while intended to protect users, will increase operating costs and disrupt BNPL’s seamless, quick experience.

In response, providers may raise merchant fees, introduce minimum purchase thresholds, or scale back cross-border operations. Smaller fintechs could struggle to absorb the costs, while traditional banks – with more mature compliance infrastructure – may be better positioned to enter or expand in the space. According to TradingPedia, this regulatory shift may fundamentally reshape competition within the BNPL ecosystem, favoring incumbents over agile newcomers.

For consumers, CCD2 translates into stronger protections through clearer credit terms and more rigorous affordability checks. While these measures aim to reduce over-indebtedness and improve transparency, they may also slow down the quick, frictionless BNPL experience many shoppers enjoy today. Users can expect more thorough credit evaluations and greater clarity on costs, but potentially less immediate access to credit. Established banks, with their robust compliance frameworks, may increasingly provide alternative credit options under the new rules.
Source: Sopra Steria, Dentons, Oliver Wyman

The EU’s Consumer Credit Directive 2 (CCD2) will bring sweeping changes to Buy Now Pay Later (BNPL) and consumer credit providers by late 2026. New compliance costs – driven by stringent creditworthiness checks and mandatory transparency – will force many smaller fintechs out or to consolidate, creating space for traditional banks with mature regulatory frameworks to expand their market share.

CCD2 will accelerate open banking adoption, enabling lenders to access real-time, comprehensive financial data for more accurate credit assessments. Meanwhile, enhanced consumer protections with clear disclosures and affordability evaluations aim to reduce over-indebtedness and increase trust.

Retailers offering BNPL must adapt rapidly, revising legal and technical systems to meet CCD2 requirements or risk losing access to the valuable European market. While BNPL growth may moderate, CCD2 paves the way for a more sustainable and responsible credit environment.

Source: Sopra Steria, Oliver Wyman, Consultancy