The UK’s new Buy Now, Pay Later rules are about more than bringing part of the sector under FCA oversight. They create an opportunity for retailers to rethink one of the most important questions in consumer finance: who owns the customer relationship?
For years, many retailers have outsourced consumer credit. A third party enables the transaction, but in many cases continues building the customer relationship long after the original purchase, driving repeat engagement and creating value beyond the original sale.
The new Deferred Payment Credit (DPC) framework creates an opportunity to revisit that model.
It is important to be clear about what has changed. BNPL is not new. Retailers have offered customers ways to defer or spread the cost of purchases for decades, through products including interest-free credit, instalment lending and revolving credit.
More recently, BNPL has become closely associated with short-term DPC products offered by third-party providers. However, these products are just one part of a broader retail finance landscape designed to serve different customers, purchases and circumstances.
Bringing DPC within a clear regulatory framework is an important step for the market.
Greater transparency, stronger consumer protections and clearer standards should give customers greater confidence while preserving access to flexible payment options. Regulation and innovation should not be viewed as competing priorities. The market needs both.
For retailers, the implications go beyond compliance. As regulation narrows the distinction between DPC and other forms of regulated retail finance, product labels such as BNPL, instalment lending and interest-free credit will matter less than the experience and outcomes they deliver.
If a retailer has the opportunity to offer comparable convenience and flexibility through a finance proposition that is embedded within its own customer journey, does it still make sense to hand that relationship to a third-party provider?
Responsible lending is fundamental to this shift. Affordability assessments are an important part of protecting consumers, but they are only one part of the picture.
Good outcomes also depend on transparency, clear information and offering appropriate products within a framework customers can trust. Customers should not have to choose between flexibility and protection.
This is why the UK’s new BNPL rules matter beyond BNPL itself.
At NatWest Boxed, we see fully regulated BNPL as one component of a broader retail finance offering, rather than as a standalone product.
As the market matures, our future roadmap is designed to help retailers bring together different lending products and financial services as part of an embedded customer proposition, giving them greater flexibility to support different needs and purchase types while keeping their brand at the centre of the experience.
The first generation of BNPL demonstrated demand for simple, flexible ways to pay. As retailers think carefully about the role credit plays in the customer relationship, the next phase will be defined by integrated, regulated propositions that deliver greater choice – while preserving the customer loyalty that they have built.
Andrew Ellis is the CEO of NatWest Boxed.
