Companies offering BNPL in Ireland must be authorised by the central bank

Tuesday 17 May 2022 11:52 CET | News

The Central Bank of Ireland has widened its consumer protection rules to cover Buy Now, Pay Later (BNPL) companies.

Companies offering ‘indirect credit’ to customers, allowing them to spread the cost of purchases over instalments while charging them interest, will need to be authorised by the regulator, the Central Bank said in a statement.

It follows the commencement of the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022, which was signed into law in April 2022 by Minister for Finance Paschal Donohoe.

Institutions that offer hire purchase agreements such as hire purchase, consumer hire, Personal Contract Plans (PCPs) and BNPL must now register with the Central Bank as either a Retail Credit Firm or a Credit Servicing Firm.

Indirect lenders provide credit to consumers by paying the retailer directly and then charging the consumer interest on future repayments. Under the regime, the regulator has also capped the interest rates firms can charge customers for credit agreements at 23% APR.

They must also notify the Central Bank if they plan to introduce any new charges or increase their rates. Companies that have been providing such services up until May 2022 can avail of transitional authorisation agreements, the Central Bank said.

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Keywords: BNPL, central bank, regulation, lending, compliance, interest rate
Categories: Payments & Commerce
Companies: Central Bank of Ireland
Countries: Ireland
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