Belgium bans 'buy now, pay later' apps from offering credit to minors

Belgium is set to prohibit 'buy now, pay later' (BNPL) services from extending credit to minors, with the ban taking effect this autumn. The government's new legislation, approved by parliament, targets popular apps such as Klarna, FLOA, and Riverty.

The law transposes a 2023 European directive concerning consumer credit agreements. Under the new rules, BNPL providers will be mandated to prevent minors from accessing credit and must also assess the creditworthiness of all applicants. Failure to comply, particularly by offering credit to underage individuals, could result in substantial fines.

BNPL services offer a convenient way to finance online purchases through short-term credit. However, their accessibility has raised concerns about financial well-being. In 2024, nearly one in five individuals who used such credit faced financial difficulties, with almost a third of those being under 24 years old.

Beyond the restrictions on credit for minors, the legislative package broadens the 'right to be forgotten' for individuals, such as cancer survivors, to include consumer credit, mirroring existing provisions for mortgage credit. Additionally, consumers will have the right to request a human review of credit applications initially processed by AI systems. This measure aims to provide a safeguard against potential algorithmic errors in an increasingly automated financial decision-making landscape.

Furthermore, only officially recognized credit providers and intermediaries will be authorized to offer credit advice, and they will not be permitted to charge additional fees for this service. Most of these new regulations are slated to come into force on November 20.