In this brief, we offer six overarching objectives that state policymakers can pursue to ensure Buy Now Pay Later (BNPL) supports consumers’ financial well-being and outline specific policies and regulatory approaches that states have used to achieve each objective.

Our analysis draws on a review of academic and policy literature, a close examination of relevant state laws and regulations, and interviews with key stakeholders, including state policymakers and regulators, industry representatives, and consumer advocates.

Why This Matters

The BNPL market has grown rapidly in recent years. In 2025, total consumer spending across all types of BNPL products rose to $103 billion. Amid an affordability crisis and cuts to public benefits, research shows many consumers are turning to BNPL to cover everyday expenses.

Though BNPL can help consumers bridge gaps between paychecks, many BNPL products rely on underwriting models that have limited visibility into a consumer’s overall debt obligations and are not consistently incorporated into the credit-reporting system. That means consumers can take on multiple BNPL loans with different providers and end up with combined payments they cannot afford.

Amid federal regulatory uncertainty, state policymakers, agencies, and regulatory bodies can explore policies and regulations that enable consumers to benefit from BNPL products while safeguarding their financial well-being.

Key Takeaways

The following six overarching objectives can help state policymakers, agencies, and regulatory bodies ensure BNPL supports consumers’ financial well-being:

1. Require clear authorization, oversight, and accountability
2. Promote transparent terms and fair pricing
3. Facilitate responsible underwriting and reporting
4. Ensure affordable repayment practices
5. Provide effective dispute resolution processes
6. Protect consumer data, privacy, and autonomy

For examples of policies and regulatory approaches states have used to achieve each objective, download the full brief.

We find that states have adopted three primary approaches to regulating BNPL:

1. Enacting specific BNPL laws and rules can provide the broadest coverage within a single regulatory framework. New York and Illinois have dedicated statutes establishing licensing and supervisory authority with rules governing the full BNPL lending process and associated risks. These types of laws may be most useful where existing laws do not clearly reach BNPL products, or where the state wants to seek comprehensive oversight. However, this approach could leave loopholes for regulatory arbitrage, bypass established oversight mechanisms, or create inconsistencies in governing similar forms of credit within the state.
2. Applying existing authority to BNPL can provide immediate and meaningful protections for users. California and Maryland have demonstrated that states can apply existing lending authority to short-term, pay-in-four BNPL products, as well as longer-term interest-bearing BNPL loans. This approach can avoid building an entirely new regulatory regime, but it could insufficiently address some risks related to BNPL. It could also produce rules that are fragmented across multiple statutes, agencies, and product classifications.
3. Gathering BNPL market data can help states understand emerging risks, evaluate practical tradeoffs, and identify policy gaps. To gain these insights, states can use information-gathering tools such as attorneys general inquiries, requests for information, and subpoenas. This can help states identify policy gaps and inform legislative action, rulemaking, supervision, or enforcement.

Each of these approaches carries advantages and disadvantages. The best approach will depend on the problem the state is trying to solve, the legal authority they have available, the evidence the state has, and the institutional capacity of the relevant agency.