BNPL regulation is coming: Are firms overpaying for affordability data?

From July 2026, Buy Now Pay Later (BNPL) providers will fall under full FCA oversight. Most firms are already working on tightening their controls. But a larger issue is at risk of being overlooked.

Preparing for regulation often leads to increased data purchasing. Yet many BNPL providers may not realise just how much they’re already overpaying, sometimes as much as 50% more than peers, for exactly the same checks.

Opaque pricing models, bundled products that mask true costs, and legacy contracts that go years without review all contribute to this. Minimum spend clauses further lock providers into inflated baselines.

This article looks at what the FCA’s proposals mean for BNPL data obligations, where unnecessary cost is creeping in, and how firms can take a more structured approach to managing data spend alongside compliance.

What the FCA’s plans mean for data obligations

The rules build on existing credit regulation, but their application to BNPL will require changes in data strategy, governance, and evidencing.

Key points for firms preparing now:

• Affordability decisions must be backed by data
  Providers will need to evidence that customers can repay using verifiable financial indicators. High-level credit scores or risk bands alone will not be sufficient.
  
  

• Vulnerability insight must be built in
  The expectation is for earlier identification of potential harm—before arrears occur. This requires data-led processes to detect warning signs at a much earlier stage.
  
  

• Decisions must be explainable
  With the Financial Ombudsman Service gaining oversight, affordability and vulnerability assessments will face external challenge. Firms must be able to explain and evidence decision-making.
  
  

• Consumer Duty raises expectations
  This is less about new rules and more about demonstrating higher standards of care. Delivering good outcomes means selecting the right data inputs and applying them consistently.
  
  

• Data cost management becomes a compliance issue
  Increasing data spend without checking price and value creates risk. Bundled services, legacy contracts, and opaque structures can all undermine efficiency at a time when scrutiny is intensifying.
  
  

Managing compliance effectively will depend on treating data procurement with the same rigour as any other regulated process.

Where BNPL firms overpay: Common data pricing traps

Despite being central to compliance, data procurement is often not reviewed commercially. Three common traps include:

These structures aren’t inherently flawed, but when left untouched while the market changes, they can result in firms paying far more than necessary.

Benchmarking as a smarter route to compliance

Regulation is pushing BNPL providers to revisit affordability and vulnerability processes. Yet the cost side of data procurement is rarely reviewed with the same intensity.

Benchmarking offers the missing perspective: showing whether pricing is fair, whether services align with actual needs, and how a firm’s position compares to peers.

Where it adds value:

1. Identify unnecessary costs
   Reviews across the market show differences of 25–50% between firms with near-identical service footprints.
   
   

2. Strengthen negotiating position
   Evidence of market rate changes the conversation with data providers, focusing discussions on actual value rather than broad packages.
   
   

3. Prevent over-reliance on “more data”
   In the face of regulation, some firms overcompensate by expanding data coverage. Benchmarking ensures procurement aligns with risk needs, not assumptions.
   
   

4. Connect compliance and procurement
   Affordability checks sit across multiple functions. Benchmarking creates alignment, ensuring commercial decisions support regulatory delivery.
   
   

5. Increase contractual flexibility
   A clear view of fair pricing supports negotiations for more agile terms, reducing the risk of being locked into outdated bundles or minimums.

Compliance doesn’t need to come with a premium

Affordability data will soon be a regulated requirement. But what firms pay for that data, and whether costs reflect their true footprint, remains within their control.

As BNPL providers prepare for FCA oversight, there’s an opportunity not only to ensure compliance but also to scrutinise whether existing contracts and structures still make sense. Regulation will raise the bar on evidencing decisions—but it should also raise expectations for transparency and value in the data that underpins them.