OCC Issues Guidance on ‘Buy Now, Pay Later’ Lending

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today issued guidance to national banks and federal savings associations to address the risks associated with “buy now, pay later” lending.

The guidance focuses on the risk management of buy now, pay later (BNPL) loans, which are payable in four or fewer installments and carry no finance charges. The guidance notes that banks should maintain underwriting, repayment terms, pricing, and safeguards that minimize adverse customer outcomes and should ensure that marketing materials and disclosures are clear and conspicuous. Additionally, prudent BNPL lending includes safeguards that minimize adverse customer outcomes.

“Supporting a fair and inclusive financial system is a priority for the OCC and is critical to maintaining trust in the banking system,” said Acting Comptroller Hsu. “As the buy-now-pay-later market grows and we enter the holiday shopping season, the guidance confirms our expectation that OCC-supervised institutions offering these products do so in a responsible manner.”

The OCC expects banks that offer BNPL loans to do so in a manner that is safe and sound, provides fair access to financial services, supports fair treatment of consumers, and complies with applicable laws and regulations.

Related Link

• OCC Bulletin 2023-37, “Retail Lending: Risk Management of ‘Buy Now, Pay Later’ Lending”