New York is stepping up to protect consumers in the rapidly growing buy now, pay later market. The state has proposed new rules aimed at preventing surprising fees, ensuring clear loan terms, and giving borrowers the rights to dispute charges and get refunds that credit card users already enjoy—safeguards that were lost last year when the Consumer Financial Protection Bureau withdrew a similar rule.
For BNPL providers, the most significant change is that New York would become the first state to cap the fees that drive much of their revenue. In most cases, BNPL providers in New York would be limited to charging an $8 penalty fee. Governor Kathy Hochul’s proposed rules would target excessive convenience, late, and other penalty fees, reshaping the economics of these loans.
Impact on BNPL Providers
These regulations are not entirely unexpected. In 2024, the CFPB under President Biden issued an interpretive rule—later rescinded—that provided similar protections for BNPL borrowers, matching those already available to credit card users.
“BNPL vendors have largely been anticipating these types of regulations, which have been discussed for several years,” said Ben Danner, Senior Analyst of Debit at Javelin Strategy & Research. “The most damaging part for to BNPL vendors would be the fee limits, as fees are a significant revenue stream for lenders, particularly offering pay-in-four interest free loans.
According to a 2025 study from the Richmond Fed, merchant fees account for most BNPL provider revenue, with late fees and penalties representing a secondary source.
Targeting Lending Practices
Predatory lending practices have become a target for Governor Hochul. In December, she signed the Fostering Affordability and Integrity through Reasonable Business Practices (FAIR) Act, which strengthened protections against junk fees and hard-to-cancel subscriptions. The BNPL regulations were mandated under a provision included in the state’s 2026 state budget.
Once the proposed rules are published in the State Register, a 60-day public comment period will begin, with the law scheduled to take effect 180 days after adoption.
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