With the increasing access to the internet and mobile applications and the impact of the pandemic, consumer preferences have started to shift. Alongside the widespread use of e-commerce, alternative payment methods instead of traditional credit cards and installment plans have emerged. One of these payment methods is Buy Now Pay Later (BNPL), which means “Şimdi Al Sonra Öde” in Turkish, allows the price of the purchased product or service to be postponed for certain periods or divided into certain maturities, and is widely used around the world.

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Buy Now Pay Later (BNPL) is a new generation financing method that postpones or allows to divide into installments the payment of the product purchased by consumers online or in physical stores. BNPL companies can offer this opportunity to consumers in their own online marketplaces or by integrating with retail companies, it can be among the payment methods after shopping.

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Buy Now Pay Later financing agreements allow consumers to make payments over time without incurring in interest charges. Even individuals with low credit scores, who may be excluded from other credit options, can obtain approval for this type of financing. BNPL credits are a type of credit that does not increase credit card debt and does not affect one’s credit score.

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Furthermore, BNPL eliminates the need for traditional credit checks or extensive documentation associated with credit cards. As a result, BNPL can be used by a wide range of consumers, including individuals with limited credit history or low credit scores BNPL, which, as a rule, does not affect the consumer's credit score and rating during the payment process, and only requires a soft credit check.

 

Why is BNPL preferred?

 

• Providing fast, online membership and approval service.

• Provides installment options for consumers who prefer not to use credit cards or who do not have a sufficient limit and use a debit card.

• Offers payment convenience and flexibility.

• Having an innovative service approach and digital and mobile compatibility influencing the young generation.

• Easy to use even for low amounts as well as high amounts.

• By offering interest-free installment plans, consumers can spread their payments over a certain period without being exposed to additional costs.

BNPL Applications and Legislation in the European Union

 

1. There is no specific legislation exclusively for BNPL services in the EU.

2. BNPL providers are regulated through different legal frameworks encompassing the Consumer Credit Directive (CCD), finance, licensing requirements, and banking and payment institutions. The CCD, which determines common rules and requirements within the scope of credit agreements and consumer credit among EU member states, is also applied to BNPL services to the extent possible.

3. BNPL providers shall apply for authorization from a supervisory body or regulatory authority for a specific license or registration. The application process typically involves providing detailed information about the company’s ownership structure, business model, risk management practices, and consumer protection measures.

4. BNPL services can be provided in collaboration with banking and payment institutions or in partnership with them.

 

BNPL Application and Legislation in Turkey

 

1. There is no specific legislation for BNPL in Turkish law.

2. The Law on Consumer Protection and the Regulation on the Principles and Procedures for the Establishment and Operation of Financial Leasing, Factoring, and Financing Companies are also applied to BNPL to the extent appropriate.

3. In Turkey, BNPL is generally evaluated within the framework of financing agreements and consumer credit agreements, and falls within the scope of the Consumer Law. Therefore, banks, private financial institutions, and financial companies recognized as “credit providers” in the context of consumer loans may offer BNPL services.

4. A company providing BNPL services shall obtain an establishment and operating permit from the Banking Regulation and Supervision Agency (BDDK) and fulfill the necessary obligations within the framework of the Regulation on the Principles and Procedures for the Establishment and Operation of Financial Leasing, Factoring, and Financing Companies.

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In conclusion, issues related to BNPL services are actively addressed through ongoing regulatory discussions and initiatives in the EU, aiming to both effectively protect consumers and support the development of new business models. This includes resolving legal uncertainties for investors and eliminating different practices among EU member states. As a result, new regulations in this area are anticipated.

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YGD CONSULTANCY LAW and MEDIATION