3 things to know about new rules on online credit in the EU

The changes could affect popular 'Buy Now, Pay Later' companies...

Image by 3D Animation Production Company from Pixabay (with added black and white filter)

European Union lawmakers have recently agreed to tighten regulations on consumer credit to shield consumers from “new forms of credits” including “Buy Now, Pay Later” and high-interest, short-term loans.

Here are three key points:

• The updated regulations aim to enhance the evaluation of customers' ability to repay and restrict costs through measures such as interest rate limitations, annual percentage rate of charge caps, or total cost of credit.

• A requirement will require that credit advertisements always include a clear and visible warning that "borrowing money costs money."

• The law will apply to credit agreements worth up to €100,000.

Such could potentially limit the marketing reach and even profitability of certain Fintech players. Klarna comes to mind (obviously).