Buy-now-pay-later products have come under Financial Conduct Authority regulation from today, giving users protections closer to those available with other forms of credit.
The government said the changes apply to services offered by providers such as Klarna, PayPal and Clearpay, which allow shoppers to spread the cost of purchases interest-free, typically at online checkout.
Under the rules, firms must carry out affordability checks before offering credit. Ministers said this is intended to prevent people borrowing amounts they cannot realistically repay and to reduce avoidable unaffordable debt.
Consumers seeking refunds for faulty goods will now have clear, enforceable rights. The government said BNPL users had previously had fewer rights than people buying the same item with a credit card or personal loan.
The measures also require people who fall into financial difficulty to be directed first towards debt advice and support rather than being immediately passed to a debt collector.
Economic Secretary to the Treasury Rachel Blake said the rules deliver a government promise to give consumers stronger protections, including checks before credit is offered, rights when things go wrong and support if repayment problems arise. The government said responsible BNPL users should not face added friction or delays.