Fintech 2026

FRANCE Trends and Developments Contributed by: Marie Frisch and Estelle Rigal-Alexandre, Soulier Bunch

a broader trend towards the digitalisation of finance, where transparency and innovation are becoming drivers of growth. Developments in the BNPL Market Under CCD II: Solvency Issues and Tighter Regulation The meteoric rise of BNPL solutions – such as Klarna, Afterpay or PayPal’s Pay in 4 option – has disrupted the European consumer credit landscape. Often per - ceived as an “interest-free” and “risk-free” alternative to traditional credit, these services have attracted a wide range of consumers, particularly among young - er demographics and financially vulnerable popula - tions. However, this rapid expansion has also exposed significant risks of over-indebtedness, driven by the lack of systematic creditworthiness assessments and the sheer ease of access to credit. The Consumer Credit Directive (EU) 2023/2225 (CCD II), adopted in 2023, specifically aims to regulate these practices by strengthening obligations for lenders, including BNPL providers. Its impact on the sector will be profound, both for consumers and fintech companies. BNPL solutions have long escaped regulatory scrutiny, as they were presented as deferred payment services rather than credit products. However, their structure is based on short-term lending, often without apparent interest, although late payment fees may apply. Unlike traditional banks, BNPL providers were not required to conduct a creditworthiness assessment before granting financing. In addition, consumers could enter into multiple BNPL arrangements simul - taneously, without a comprehensive view of their level of indebtedness, thereby increasing the risk of default. CCD II, adopted in 2023, marks a significant milestone in strengthening borrower protection and harmonising consumer credit regulations across the EU. It replaces its 2008 predecessor (CCD I) and reflects a climate in which rising household debt and aggressive commer - cial practices have underscored the need for greater transparency, responsible lending and consumer rights. CDD II aims to adapt the legal framework to market developments, including the rise of fintech companies, online lending and new forms of credit.

Regarding BNPL, CCD II explicitly classifies these services as consumer credit, thereby subjecting pro - viders to the same regulatory standards as traditional banks. CCD II requires BNPL providers to comply with the following requirements. Mandatory creditworthiness assessment BNPL lenders will be required to conduct a thorough assessment of the consumer’s repayment capacity before granting credit. This assessment must take into account the consumer’s income and expenses, other financial commitments (such as outstanding loans or rent) and repayment history (including past arrears and defaults). This obligation will apply regard - less of the transaction value (for instance, a EUR100 purchase split into three instalments), representing a radical shift for BNPL providers accustomed to fric - tionless and light-touch approval processes. Enhanced transparency Consumers will receive a standard pre-contractual credit information form before signing up, detailing the total cost of the credit (including late payment fees), the annual percentage rate of charge, and the conse - quences of non-payment (penalties, impact on credit score). Furthermore, advertising for BNPL services must be clear and not misleading, and must include mandatory information on the associated risks. Curbing abusive practices Late payment fees will be capped to prevent exces - sive penalties (with some providers currently charg - ing as much as 20%). Lenders will be prohibited from incentivising consumers to enter into multiple BNPL arrangements simultaneously without a comprehen - sive creditworthiness assessment. In the event of repayment difficulties, lenders will be required to offer forbearance measures before initiating enforcement proceedings. Right of withdrawal and early repayment Consumers will benefit from a 14-day right of with - drawal following the conclusion of the credit agree - ment. They will also be entitled to repay their credit early at no extra cost, with a proportional reduction in interest.

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