BNPL’s honeymoon with regulators is officially over.

New York just became the first state to fold an entire “Buy-Now-Pay-Later Act” into its FY 2026 budget, requiring providers to obtain a lending license, cap finance charges at 16 percent, and meet credit-card-style disclosure and dispute-resolution rules.

Industry groups are pushing back, arguing the framework treats zero-interest installment plans as if they were revolving credit.  Which could potentially choke off credit access for thin-file consumers and piling more compliance costs onto already slim margins. But New York is unlikely to be alone for long: bills in California and Illinois are gathering bipartisan support, and Massachusetts’ consumer-finance bureau has hinted that “copy-and-paste” legislation is on its 2026 agenda.

These are some things to think about if you are in the BNPL game:

If each state sets its own caps, late fee limits and data-privacy mandates, national BNPL players face a complex regulatory quilt.  Not that there is anything wrong with quilting.  It is something that takes time and effort.

A hard interest ceiling forces providers to rethink merchant discount rates or up-sell ancillary services to preserve unit economics.

New licensing rules will require much more detailed reports, so it’s smart to tighten your record-keeping and the way you set aside funds for potential losses now.

Map your customer footprint against pending bills and run “what-if” pricing scenarios under multiple cap structures. Firms that build compliance playbooks early and articulate the consumer benefit in plain language (something I am completely in favor with) will be the ones still scaling.