Bill to regulate "buy now pay later" credits introduced in parliament

On 15 March 2023, the Minister for Industry, Business and Financial Affairs introduced in Parliament bill number L 58 which, among others, will amend parts of the Act on Consumer Loan Undertakings (lov om forbrugslånsvirksomheder) and the Credit Contracts Act (kreditaftaleloven) to bring "buy now pay later" credits ("BNPL credits") and the providers of such products within the scope of the same regulation as traditional consumer credit products. In our Insight from July 2022 we reviewed the consultation draft of the amendment bill in detail.

Changes to the consultation draft

Compared to the consultation draft which we previously reviewed, particularly the following changes to the amendment bill are worth noting:

• In the consultation draft, the 90-day deadline for ordinary deferral of payment of the purchase price offered directly by the vendor of the goods/services was linked to the date of the purchase contract. As we noted in our earlier Insight, this would be a challenge in construction and other relationships where (instalment) payment as work is performed (potentially long after the contract is entered into) is the norm. This has been addressed in the amendment bill so that the deadline is calculated from the time of supply.
• The exemption for payment cards with a credit-line the unfortunate use of the term "debit card" has been removed and the amendment bill instead generally refers to "payment cards with deferred payment". Furthermore, the permitted credit time for such products (before they become subject to traditional consumer credit regulation) has been extended from 40 to 50 days.
• The preparatory works to the amendment bill now clarify that it is indeed the intention (and not merely an unintended consequence) of the bill that all payment deferral to consumers in excess of 90 days from the date of supply with constitute regulated consumer credit even though the deferral is offered by the vendor of the goods/services.

As also mentioned in our earlier Insight, adoption of the amendment bill will mean that BNPL credits henceforth will become subject to the same regulation as traditional consumer credit products and that providers of such products will be required to comply with the same rules - including potentially having to obtain a license as a consumer loan undertaking (forbrugslånsvirksomhed).

It is particularly relevant to note than this will also mean that the many foreign BNPL credit providers in Denmark on a pure cross-border basis who are not credit institutions will henceforth need to obtain a Danish license as a consumer loan undertaking to continue to offer BNPL credits legally.

Entry into force and transition period

According to the amendment bill, the parts of the bill concerning BNPL credits will enter into force already on 1 July 2023 and will apply to credit agreements regarding BNPL credits entered into from that time but not to agreements entered into prior thereto.

As regards businesses (including foreign businesses) who will become subject to the license requirement in § 3 of the Act on Consumer Loan Undertakings as a consequence of the amendment bill, the bill contains a transitional rule setting a deadline on 1 January 2024 for already (before 1 July 2023) active providers of BNPL credits to apply for a license and permitting such providers to continue trading while the Financial Supervisory Authority (Finanstilsynet) processes the application.