In light of the significant spread in the EU and Italian market of the offer of Buy Now Pay Later (BNPL) products, i.e. credit products allowing consumers to buy goods and/or services and pay the relevant price later also in instalments, the Bank of Italy issued a communication warning consumers about the potential risks of such products.
The Bank of Italy, in its communication, also illustrated the main forms of BNPL available in the market and the applicable regulatory framework, which may be different depending on the specific features of the product.
More specifically, BNPL products may fall within the scope of the consumer credit legal framework where certain conditions are met (e.g. the amount of the financing is equal to or higher than 200 EUR and fees apply) and in such case specific transparency and conduct of business rules apply. Where such conditions are not met, a financing product offered by a bank or an intermediary is in any case subject to specific Italian rules – slightly different from those set out under the consumer credit legal framework – aimed at ensuring transparency and fairness toward consumers. Where, instead, merchants grant a deferred payment without interest and charges directly to consumers, no regulatory provisions apply, even when the merchant has an agreement with a bank for selling the credits (this circumstance may however create some confusion for consumers).
The Bank of Italy will continue to monitor the developments in this area (also considering the forthcoming review of the Consumer Credit Directive (Directive 2008/48/EC).
Next steps
The Bank of Italy communication is available here in Italian only.
Authored by Jeffrey Greenbaum and Elisabetta Zeppieri.
