Buy now, pay later companies have accelerated moves into banking as fresh regulation and shifting merchant deals squeeze traditional BNPL economics. Over the past year a string of high profile filings and partner agreements has left the industry racing to secure deposit-taking licenses or deeper ties to banks, a strategy executives say will protect margins and preserve product flexibility.
Regulatory pressure reshapes strategy
Regulators have tightened the frame around BNPL, pushing lenders to accept rules that look more like traditional consumer credit. In the United States the Consumer Financial Protection Bureau made a major move in May 2024 that treated many BNPL arrangements as credit products subject to existing protections, a step that forced lenders to revisit disclosures, dispute handling and underwriting.
Across the Atlantic the Financial Conduct Authority has set an explicit timetable for bringing unregulated deferred payment products into the regulated consumer credit perimeter, with firms told to prepare for regulation beginning on 15 July 2026. That clock is driving UK and European players to shore up compliance and to seek banking relationships that reduce regulatory friction.
Charters, industrial banks and partnerships
A number of large fintechs have responded by applying for bank charters or industrial loan company status, and by deepening partnerships with established banks. In January 2026 Affirm submitted applications to establish a Nevada chartered industrial loan company called Affirm Bank, signaling a clear pivot from pure platform finance to a hybrid bank model. Company statements emphasize expanded product control, lower funding costs and direct access to deposit funding.
PayPal followed a similar path late in 2025, filing for an industrial bank charter that would give it direct access to FDIC insured deposits and broader lending powers aimed at small business customers. These filings come as regulators at the federal and state level have become more receptive to new charters, and as nonbank entrants look to reduce reliance on third party originators.
Market signals and merchant volatility
The business case is not only regulatory. Merchant relationships that once underpinned BNPL growth have shifted. Large accounts can move quickly, and merchants have used BNPL selection as leverage to lower costs or to demand new features. The recent switch of a major retail partner to a different BNPL provider underscored how fragile referrals and co-branded arrangements can be, and why lenders want more control over payment rails and funding.
Why the rush matters
Industry observers point to a broader trend of nonbank entrants pursuing banking licenses, with more than a dozen new de novo charter applications filed in recent quarters as firms seek the long term advantages of direct deposit access and regulatory clarity. That wave is reshaping competition among fintechs, incumbent banks and mid sized lenders.
For consumers the shift could mean BNPL that looks more like traditional credit in terms of protections and dispute rights. For banks the arrival of platform players as chartered competitors raises questions about pricing and the future role of sponsoring partnerships. Strategically, the move toward charters and deeper bank ties is a hedge, intended to preserve BNPL's growth while meeting market and regulatory demands.