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The transposition deadline of the revised Consumer Credit Directive (Directive (EU) 2023/2225 on credit agreements for consumers - CCD2) is November 20, 2025. Member states are required to adopt and publish laws, regulations and administrative provisions necessary to comply with the directive by that date.
Germany and France are the only countries that have passed legislation to transpose and implement the directive so far, whereas some others such as Spain have only started the legislative process. There has also been little indication from other member states that their transition process has even begun.
The revised Consumer Credit Directive ensures comprehensive consumer protection by expanding the scope of the previous Directive 2008/48/EC (CCD1). It now applies to credit agreements that have an amount lower than the former €200 threshold, crowdfunding agreements and “buy now, pay later” (BNPL) schemes. The new directive aims to increase transparency and improve consumer protection where certain credit agreements were previously unprotected.
The bigger picture
Until the adoption of CCD2, BNPL schemes were highly unregulated across the European Union due to a CCD1 exemption for credit agreements where the credit is granted free of interest and without any other charges, and for credit agreements under which the credit must be repaid within three months. This exemption applied to the majority of BNPL schemes. The BNPL market in Europe has experienced strong growth, with major providers such as Klarna, Afterpay, PayPal and Clearpay leading the way with operations in most European jurisdictions. The popularity of BNPL has been driven by the growth of e-commerce and the convenience of instant credit solutions, with consumers increasingly using it; however, with limited regulation until this point.
With the adoption of CCD2, the provision of third-party BNPL schemes now falls under the scope of EU consumer protection regulations. Recital 16 of CDD2 explicitly states that it applies to BNPL services, whereby the creditor grants credit to a consumer for the exclusive purpose of purchasing goods or services provided by a supplier, even if they are offered free of interest or without any other charge. The provisions of CCD2 do not apply to deferred payments, where the supplier, without a third-party offering credit, gives the consumer time to pay for the goods or services.
Now that BNPL providers have been brought into the regulatory remit of CCD2, requirements that previously did not apply to them now do. This includes requirements in relation to:
- Licensing and supervision.
- Advertising.
- Pre-contractual information.
- Creditworthiness assessments.
- The form and content of the credit agreement.
The UK has also taken a similar approach to regulating BNPL services, referred to as deferred payment credit (DPC). The Financial Conduct Authority (FCA) has been tasked with developing rules and guidance for DPC and, from July 2026, lenders that offer a DPC agreement to finance the purchase of goods or services from a merchant will come under FCA regulation. The aim of the regulatory regime for DPC is to reduce the risks of harm to consumers.
Why should you care?
The transposition and implementation of CCD2 in member states will require BNPL providers to meet requirements they were not previously subject to. CCD2 aims to ensure that the directive protects consumers of smaller and previously unregulated forms of credit.
Impact of requirements on third-party BNPL providers
- Article 37 of CCD2 requires member states to “ensure that creditors and credit intermediaries are subject to an adequate admission process, to registration and to supervision arrangements". Prior to the introduction of CDD2, BNPL providers were operating in what many considered a “grey area” and, therefore, were not required to register with a supervisory authority for the provision of BNPL services. This new requirement places an extra burden on BNPL providers that are currently unregistered, increasing their compliance overhead with an increased need for legal, compliance and risk teams.
- Article 7 of CCD2 requires that any advertising and marketing communications concerning credit agreements be fair, clear and not misleading, while Article 8 lays out the standard information that must be included in advertising materials for credit agreements. The advertising rules may affect the marketing function of BNPL providers, with the requirement that all advertising materials comply with the terms of Article 8, which may lead to increased costs for producing or adapting advertising materials.
- A significant development of CCD2 is its refinement of the creditworthiness assessment requirements of CCD1. Creditors are required to thoroughly assess a consumer’s creditworthiness before entering into a credit agreement; however, under Article 18 of CCD2, there are specific references to undertaking assessments in the consumer's interest and to prevent irresponsible lending practices and over-indebtedness. Although the majority of BNPL schemes offer credit on a smaller scale, the evaluation of creditworthiness applies to these credit agreements. The directive also requires creditors to establish procedures for these assessments, and document and maintain them. Having to establish creditworthiness assessments may present financial and practical challenges for BNPL providers, as an increase in resources will be needed to establish, document and maintain these procedures.
Although CCD2 introduces an increased regulatory burden for BNPL providers, it does also provide potential opportunities to those that adapt, such as:
- Increased trust and reputation among consumers as more regulation would reassure consumers, reduce regulatory risk and possibly lead to higher usage among more sceptical consumers.
- Better risk management with the introduction of formal creditworthiness assessments, which means the risk of default or non-repayment would be reduced.
- Compliance is key to differentiation, and providers who prioritise it alongside transparency and fair pricing will gain a competitive advantage.
As CCD2 comes into effect, BNPL providers face unique challenges in adapting to their new regulatory landscape. To ensure that they are ready for the entry into force of the new legislative framework, they should take the following steps:
- Monitor the legislative process within the jurisdictions where they provide services. Although the directive is already in force, national transposition across member states is a work in progress and member states have the ability to opt-out of applying certain provisions, such as those relating to the standard information to be included in advertising materials, to credit agreements of less than €200, to agreements granted free of interest and charges, and to agreements where the credit must be repaid within three months and where only insignificant charges are payable.
- Review the services that they provide and whether they align with the provision of the CCD2. Services that are found not to align should be revised.
- Ensure that clear terms, costs and risks associated with the BNPL products are provided for clients within their credit agreements, so that they are equipped with all the necessary information to make informed decisions and protect themselves.
- Review and modify their customer communication strategies to guarantee that consumers are fully informed about mandatory information that must be provided to consumers before a credit agreement is entered into.
- Establish appropriate measures for customer creditworthiness assessments, document the procedures and maintain and update them as necessary.
Non-compliance with the provisions of the CCD2 and the national provisions adopted pursuant to the directive may result in effective, proportionate and dissuasive penalties, which may include fines or other administrative proceedings as set out in Article 44 of the CCD2.
Next steps
Member states have until November 20, 2025, to transpose the directive into their national legislative framework by adopting and publishing laws, regulations and administrative provisions necessary to comply with it. The implemented measures will then become applicable as of November 20, 2026. With less than a month remaining until the transposition deadline, little action has been taken across the member states to implement the directive; therefore, it is still unclear what approach they will take.
Creditors and credit intermediaries, including BNPL providers, should ensure that their credit products, transparency measures and consumer information are up to date and in line with the revised directive and national legislation, as and when more information becomes available.
