What does all this mean? Proposed regulation aims to protect consumers from a financial standpoint and data standpoint. In the wake of defaults, governments want to help ensure that borrowers are not getting in over their heads, and that the lending criteria reflects the same standard for providers. This would not only affect the onboarding process, but include monitoring during the entire customer lifecycle. It also affects the information the providers must share with users about the loans, as well as the data they get from the users. Data protection under GDPR is robust, and Klarna has already been fined in Sweden for violating the guidelines. For some BNPL providers, new compliance requirements may not change a whole lot, but for fintechs with looser terms, risk mitigation, and transparency, overhauls may be likely, if they can operate at all. Ultimately, regulation aims to minimize losses for both the company and the customer. We’ll be looking to Australia and the UK to see how successful regulations are and how the US and other countries will follow suit. And as BNPL reaches new verticals and industries, the way we think about the microloans will likely impact regulation and user behavior alike.
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