Fintech Series: Buy Now Pay Later

Buy Now Pay Later (“BNPL”) is a type of short-term financing in the consumer loan space which allows customers to make purchases and pay for them in equal installments at a future date with zero interest. BNPL has many business models, including but not limited to:

1. Apps: enables shopping on e-commerce platforms as well as generation of QR codes for in-store use.

2. Cards: includes a physical card to be used for in-store and online transactions.

3. Browser Extensions: integrating BNPL into the shopping journey for desktop users via a browser extension.

In response to the limitations imposed on traditional financing and the current financial uncertainty in the world, BNPL has emerged to prove itself as a successful financing model which incentivises consumers to access credit and obtain instant short-term financing without the need to go through the typical processes for obtaining credit in the traditional financing world. Hence, BNPL offers countless benefits including:

1. Improving the consumers’ shopping experience as they obtain quick credit decisions from BNPL providers.

2. Supporting the retail sector as consumers tend to make more purchases due to the interest free advantage of BNPL.

3. Customising payment plans that suit the consumers’ financial position.

4. Reducing the process for obtaining credit and the paperwork required.

How can PwC Legal help?

Given the absence of specific laws and regulations for BNPL in most of the Middle East countries, and the surrounding challenges which include regulatory uncertainty, PwC Legal Middle East supports the public and private sectors with the following:

1. Assessing your business activities and identifying the applicable regulatory framework within the selected jurisdiction. 

2. Advising your business with defining the most suitable legal structure for the intended activity that is commensurate with your objectives.

3. Supporting with obtaining the relevant BNPL license.

4. Benchmarking against leading jurisdictions in order to define the regional and global best practices and how the key regulators respond to these emerging financing platforms.

5. Assisting with the drafting and development of the regulatory and supervisory regimes. 

6. Legislative analysis to determine any potential overlaps or interactions with the jurisdiction’s existing laws and regulations and offer recommendations to address the same.