The European Union will strengthen the framework for split and deferred paymentsv

The Council of the European Union has indeed voted for revised legislation (available here) which now remains to be implemented in national laws. The text extends the regulation to credits of less than 200 euros as well as Buy Now Pay Later (buy now, pay later, editor’s note). Two payment offers which have experienced notable acceleration in recent years, particularly in fashion and luxury, and in particular among the younger generation of consumers (according to a MixFactory study for the instant credit specialist Younited Credit). Inflation affecting Europe has also encouraged experimentation with this method of purchasing.

A purchasing process which is therefore moving towards more rules. The services offering these credits must present in a clear and understandable manner the total cost of the credits that must be repaid. Lenders will also be required to ensure that customers are able to repay their loans. Consumers who will also have 14 days to give up their credit.

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The revised legislation also establishes “stricter rules on advertising in order to reduce abusive credits granted to over-indebted consumers”. And in the process puts in place effective measures against overbilling.

“As the digital transition facilitates access to credit, we must protect consumers against irresponsible lending practices that are particularly widespread in online environments,” commented Alberto Garzón Espinosa, Spain’s interim Minister of Consumer Affairs. “With this new legislation, consumers will have all the information they need, and it will be presented clearly, even when it comes to small loans.”

In 2021, the professional confederation Ecommerce Europe, while recognizing the merits of the reinforced supervision project, pointed out the limits of the latter. “Extending the scope of application (of credit rules) would expose these interest-free short-term credits to the same regulatory burden as high-value long-term credit. The constraint would not be proportional to the level of risk presented by these products and would ultimately reduce the choice offered to customers and merchants,” then indicated the federal body, which feared seeing the most modest households thus pushed towards credit offers. more expensive.

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