New York’s BNPL Law Takes One Step Closer to the Finish Line with New Proposed Rule

The New York Department of Financial Services (“NYDFS”) has issued a Proposed Rule implementing the state’s enacted but not yet effective Buy-Now, Pay-Later Act (the “NY BNPL Act”). The Proposed Rule, issued July 15, comes several months after the NYDFS published the Pre-Proposed Rule in February 2026, as discussed in our prior Legal Update. It narrows several requirements previewed in the Pre-Proposed Rule—including with respect to usury, notice, and periodic statement timing—while introducing significant new obligations, most notably a requirement that BNPL lenders provide a “reasonably accessible interface” for consumers to manage and make loan payments. The Proposed Rule also removes previously proposed tipping-related restrictions and makes targeted adjustments to late fee restrictions, payment allocation, and capital and surety bond requirements for BNPL licensees. This Legal Update summarizes the key changes reflected in the Proposed Rule and discusses the next steps in the rulemaking process.

Summary of the NY BNPL Act

The enactment of the NY BNPL Act signaled an aggressive regulatory approach that would subject a broad range of BNPL providers—including fintechs, bank partnership programs, certain banks, and even some secondary-market purchasers—to licensing, supervision, disclosure, underwriting, servicing, privacy, and reporting requirements. The Proposed Rule would cap BNPL interest rates at New York’s 16% civil usury limit, impose strict restrictions on fees, require extensive consumer disclosures modeled on (and in some respects exceeding) federal credit card requirements, and apply compliance obligations far beyond traditional “pay-in-four” products. With this legislation, New York is positioning itself as the most comprehensive state regulator of BNPL products, creating a potentially burdensome compliance framework that could affect many consumer financing programs beyond the BNPL products that originally motivated the legislation.

The Proposed Rule’s Revisions to Scope of the NY BNPL Act

The NY BNPL Act’s application to mortgage or real property-secured loans is a nuance considered in our previous Legal Update. Under the Proposed Rule, purchase money mortgage loans are expressly exempt from the NY BNPL Act if they are secured by residential real property and made for a consumer (i.e., personal, family, or household) purpose. Yet, the Proposed Rule’s new exemption for purchase money mortgage loans clarifies rather than meaningfully narrows the scope of the NY BNPL Act, which is already limited by its terms to loans financing the purchase of goods or services—which do not extend to real property in any event.

Change to Usury Determinations

Most BNPL loans subject to the NY BNPL Act are limited to New York’s civil usury ceiling of 16% APR. The Pre-Proposed Rule provided that a “finance charge” as defined under the federal Truth in Lending Act (“TILA”) and Regulation Z was an “example” of interest for usury purposes (but not for disclosure purposes, as discussed below).

As amended by the Proposed Rule, interest would now be defined exclusively under New York’s existing banking law, to include, as “examples,” any amount charged as a condition of making or originating a BNPL loan, and any amount charged for the making of an installment of a BNPL loan. This is consistent with how compliance with a given state’s usury law is usually determined; state laws normally do not outsource interest rate computations to federal law. This change is likely to decrease confusion and the possibility of conflicts between New York and federal interest rate determinations for usury purposes.

Changes to Required Disclosures and Notices

Yet, while Regulation Z’s definition of a finance charge is no longer an express example of interest under the NY BNPL Act for usury purposes, it continues to be cited for cost-of-credit disclosure purposes. As a result, while compliance with usury limits will be determined according to New York state concepts of interest, the NY BNPL Act’s required pre-transaction and post-transaction disclosures of a BNPL loan’s “finance charge” and “annual percentage rate” will be determined according to Regulation Z if this aspect of the Proposed Rule is finalized in its current form.

In addition, the Proposed Rule simplifies notice requirements, such that a BNPL lender would be prohibited from assessing a late charge without providing a minimum of seven days’ advance notice of the payment due date regardless of the length of the billing cycle. In the other direction, advance notice of a payment due date may not be given more than one statement cycle in advance.

The Proposed Rule takes a less prescriptive approach to timing for delivery of periodic statements. Under the Pre-Proposed Rule, periodic statements were to be mailed or delivered at least 14 days prior to the payment due date. The Proposed Rule provides simply that periodic statements are to be mailed or delivered “promptly” after the end of the previous statement cycle—but as discussed above, no later than seven days prior to the payment due date. The Proposed Rule also clarifies formatting requirements for periodic statements.

New “Reasonably Accessible Interface” Requirement

One of the more significant changes introduced in the Proposed Rule is a new requirement for BNPL lenders to provide customers with a “reasonably accessible interface” through which to make loan payments. The new requirement shows the NYDFS’s recognition that BNPL financing is typically offered through mobile apps and websites. While the Proposed Rule does not specifically define what constitutes a reasonably accessible interface, it does list a number of requirements that the interface must meet.

The interface must allow consumers to allocate payments to one or more outstanding BNPL loans, and to prepay any pending loan installments. The interface would be required to disclose the following for each outstanding loan, as applicable:

• The aggregate amount outstanding;
• The aggregate amount then due and payable, including any overdue amounts;
• The date and aggregate amount of the next installment payment;
• The number of remaining installment payments;
• The annual percentage rate together with any applicable variable base rate;
• Whether the loan is secured; and
• Any other material terms that a consumer “would reasonably need to know” to make an informed decision about how to allocate the relevant payment.

Tips and Gratuities No Longer Expressly Regulated

The Proposed Rule removes requirements that the Pre-Proposed Rule put forward pertaining to a BNPL lender’s receipt of tips or gratuities from consumers. The Pre-Proposed Rule prohibited a lender from soliciting tips unless it provided certain disclosures, including about the voluntary nature of the tip, and complied with requirements related to solicitation frequency and default payment settings. Tips are not specifically addressed at all under the Proposed Rule. If tipping-related language remains absent in the final version of the rule, then tipping practices will not be subject to specific regulation under the NY BNPL Act. That said, practices relating to tipping would still be subject to more general federal and state prohibitions on unfair, deceptive, or abusive acts or practices (“UDAAP”). Tip solicitation practices have already come under regulatory scrutiny in connection with business models such as earned-wage-access (“EWA”) programs.

Other Changes

Finally, the Proposed Rule imposes granular requirements relating to the allocation of a consumer’s loan payments to one or more outstanding BNPL loans. The Proposed Rule also makes tweaks to capital and surety bonding requirements for BNPL licensees.

Looking Ahead

Under the NY BNPL Act’s rulemaking process, the Proposed Rule must remain open for public comment for at least 60 days following publication, after which the NYDFS may adopt final rules that would take effect 180 days after their publication in the state register—providing at least 240 days between the July 15 date of the proposal and the ultimate effectiveness of any of New York’s new BNPL regulatory requirements (and likely more, assuming the NYDFS spends any time reviewing and reacting to public comments before finalizing the rule).

Non-exempt BNPL lenders will then be required to apply for a license within 45 days of the rules’ effective date and will be permitted to operate on a provisional basis while NYDFS reviews their applications. The specific requirements described above may still change before a final rule is adopted. In the meantime, BNPL lenders and other market participants operating in New York should begin evaluating their products and practices against the Proposed Rule’s requirements, particularly the new “reasonably accessible interface” mandate, which may require material changes to mobile app or website payment functionality. Lenders should also revisit their usury, disclosure, and periodic statement practices in light of the changes to the Regulation Z references and notice timing discussed above. We will continue to monitor NYDFS’s rulemaking process and provide further updates as the BNPL Act moves toward final implementation.

In addition, we note that Illinois has now joined the fray with its own BNPL regulatory regime, enacted by statute on June 26, 2026.