By Alex Mifsud, CEO and Co-founder, Weavr
From 15 July 2026, Buy Now Pay Later products in the UK fall squarely within the FCA’s regulatory remit. Providers will require authorisation. They must conduct meaningful affordability assessments and issue Consumer Credit-compliant pre-contract disclosures. Also, they must operate under Section 75 joint liability rules and provide customers with access to the Financial Ombudsman Service. For consumers, this was long overdue, as the Woolard Review raised the alarm as far back as 2021. For the industry, it is a moment of reckoning.
One development captures the broader direction of travel. When Apple shut down Apple Pay Later after just 15 months and opted to partner with Affirm rather than run its own programme, it answered a fundamental question for the entire sector. If the world’s most resource-rich technology company assessed the cost of operating BNPL in-house, and concluded that partnership made more sense, everyone else should take note.
That decision is playing out against a backdrop of significant market contraction. Openpay went into administration. Laybuy collapsed in June 2024, leaving 300,000 UK customers without a provider. LatitudePay shut down, and Zip pulled back from the UK and a number of other markets. Whatever the growth story looked like on paper, the reality is a supply side consolidating around a smaller group of scaled, well-capitalised, fully licensed operators.
The incoming UK regime, combined with the EU’s Consumer Credit Directive 2, accelerates this trend. Authorisation costs, affordability tooling, financial promotions compliance, complaints handling infrastructure and senior management accountability regimes all carry fixed overheads that large platforms like Klarna or Clearpay can absorb. For smaller lenders, or retailers who have considered running their own BNPL offering, these requirements are effectively prohibitive. Furthermore, the supply side narrows further and the demand side, including many of the world’s largest retailers, has already chosen to partner rather than build.
Predicting who emerges from July in a strong position is relatively straightforward. The more interesting question is where those winners choose to compete next.
The untapped opportunity in physical retail
ONS Retail Sales data from March 2026 shows that online channels accounted for just 28.7% of UK retail sales. That means over 71% of transactions still take place in stores. Yet fewer than 1% of those stores offer BNPL at the point of sale. Across Europe, GlobalData estimates the addressable gap between in-store and online BNPL penetration at roughly €85 billion in annualised retail spend.
This is not a regulatory barrier. It is an operational one. Mobile wallet contactless payments now represent around a third of all UK card transactions, according to UK Finance. A BNPL credential that cannot be tapped at a till technically works, but it creates friction and slows queues. Additionally, it creates confusion for staff and undermines the seamless checkout experience that retailers invest heavily to deliver. In-store BNPL delivered through the mobile wallet is where the category needs to go. Only a handful of providers have genuinely got there at any meaningful scale.
The reason most cannot lies beneath the consumer credit licence. For BNPL operators, issuing card credentials that work at physical points of sale requires direct or sponsored membership of the Visa and Mastercard schemes. Additionally, it requires additional payment services licensing, a card processor, a tokenisation provider, wallet provisioning software, scheme certifications, and integrations with Apple and Google’s wallet provisioning systems. Altogether, it amounts to years of development and millions of pounds of investment, on top of everything that regulation already demands.
Where embedded finance comes in
This is where the consolidation story connects with infrastructure. The BNPL platforms that emerge from the regulatory transition as clear winners will not need to build a second licence stack from scratch. What they need is an embedded finance partner that can deliver mobile-wallet-native virtual card issuing, scheme membership and safeguarded funds infrastructure as a managed service. In turn, they can stay focused on lending well, while the infrastructure layer handles getting that credit decision into Apple Pay or Google Pay in seconds.
After 15 July, the winners will not be those who treat regulation primarily as a compliance cost. Instead, they will be the ones who treat it as the signal to push BNPL into the 99% of physical retail where it still has not arrived.
This article is addressed to businesses and technology partners exploring embedded BNPL infrastructure. It does not constitute a financial promotion or an offer of credit to consumers. The BNPL credit described in this article is provided by the relevant licensed lender, not by Weavr (Europe) Limited. Weavr provides payment technology only and is not a lender.
