The AFM has raised concerns about minors accessing BNPL services, despite a Code of Conduct by Billink , In3 , Klarna , and Riverty to prevent such access. Towards the end of 2023, four major BNPL providers in the Netherlands, Billink, In3, Klarna, and Riverty initiated a Code of Conduct. The Code of Conduct mandated a clear disclosure of costs, conditions, and payment obligations by providers.

This was aimed at enabling consumers to make informed decisions and understand the financial implications of their purchases. More importantly, the code was set to offer protection for minors and financially vulnerable consumers. Despite these efforts, the AFM has identified significant challenges and concerns with current BNPL practices.

The AFM notes that underage individuals may bypass BNPL age checks, as the providers currently do not verify age for every transaction, only doing so for those deemed risky. In its market update, the AFM states that despite a ban on lending to individuals under the age of 18, there were 600,000 transactions associated with minors for an average amount of EUR 50, in 2023. Representatives from the AFM emphasised that this demographic, yet to embark on their financial journey, is already engaging in significant risk-taking behaviour.

For consumers who opt for BNPL but fail to settle their bill, additional charges are incurred: an average of 15 euros on top of the original amount if the payment deadline is missed. If the payment is still not made, the debt is transferred to a collection agency, incurring an average additional cost of 40 euros. The AFM notes that this makes it an expensive form of credit.

Furthermore, consumers may use BNPL to extend their financial capacity, even if they are already in debt. Thus, missing a payment deadline only exacerbates financial difficulties. While the Code of Conduct allows for reversing transactions if it is discovered that the customer was underage, the AFM deems this action insufficient.

Given the widespread nature of this issue, the AFM urges the immediate implementation of mandatory identity and age verification for all transactions. The Netherlands' Minister of Finance has announced that he and other ministers involved will investigate whether age verification can be enforced. What can the AFM do? Currently, the AFM faces challenges in addressing this issue due to a legal loophole, as BNPL schemes falls outside the scope of the European Consumer Credit Directive (CCD).

The exemption applies to credit services that are nearly interest-free and offer deferred repayment periods of at least three months. Since BNPL payment terms typically range from 14 to 30 days, they fall within this exemption. As a result, BNPL providers are currently not required to adhere to specific disclosure requirements.

Moreover, unlike credit card companies, BNPL providers are not obliged to conduct thorough assessments of a customer's financial situation. However, efforts are underway to address this regulatory gap. The CCD2, which aims to close this loophole, was officially published in October 2023 and took effect in November 2023.

EU member states are mandated to enact and publish the necessary regulatory framework for CCD2 by 20 November 2025. Ultimately, CCD2 will fully replace the previous directive (CCD1 from 2008) on 20 November 2026. .