New York's DFS proposed licensing, monthly billing, and an $8 late fee cap for BNPL lenders. The 60-day comment period runs through Sept. 14. Affirm and PayPal face new compliance costs.
The New York State Department of Financial Services proposed licensing and supervision rules for buy now, pay later lenders Wednesday. The proposal, posted on the department's regulatory activity page, opens a 60-day comment period ending Sept. 14.
The rules would require BNPL providers to obtain a license and send monthly billing statements. They would also cap late fees at $8 and mandate dispute resolution processes. The proposal implements a law the New York legislature passed as part of the state's 2025 budget.
The Financial Technology Association said in a statement that it appreciates the DFS's work and will submit comments. "As the buy now, pay later industry continues to grow, we welcome appropriate regulation that reflects the consumer protections and standards already in place at the leading firms," FTA President and CEO Penny Lee said.
The American Fintech Council had earlier warned that while many provisions align with its own BNPL standards, some language could limit consumer choice and reduce credit access. Consumer Reports said the proposed rules would provide the strongest consumer protections of any state.
The DFS had earlier published draft regulations for BNPL financing options in February, opening a preproposal comment period that ended March 5. The latest proposal adds to a growing regulatory focus on BNPL. For publicly traded companies like Affirm (AFRM) and PayPal (PYPL), which offers the Pay in 4 product, compliance costs could rise. The $8 late fee cap also limits a source of revenue.
Industry groups have 60 days to comment. The final rule could change based on feedback. If adopted as proposed, BNPL lenders in New York will face higher operating costs and tighter consumer protections. Other states may follow New York's lead, increasing the regulatory burden nationally.
The comment period closes Sept. 14.
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