Supreme Court clarifies classification of Buy Now Pay Later as consumer credit

Are BNPL (Buy Now Pay Later) providers subject to the rules of Directive 2008/48/EC (the Consumer Credit Directive)? If so, these providers are required, among other things, to provide consumers with information about the interest payable in the event of late payment and the costs of non-compliance. In addition, these providers are then obliged to assess the consumer's creditworthiness. In an earlier judgment of June 30, 2023, the Supreme Court answered a first series of preliminary questions about the scope of the Consumer Credit Directive in relation to BNPL providers and, in turn, the Supreme Court also referred preliminary questions to the Court of Justice. Last Friday, following the ruling of the Court of Justice in October 2024, the Supreme Court provided clarity on whether and when a BNPL service provider falls under the rules for consumer credit.

Background to the Supreme Court ruling

BNPL service providers are becoming increasingly popular, but are also under intense scrutiny. These services essentially allow consumers to pay later (often within three months) via a BNPL provider. The current Consumer Credit Directive does not (yet) take this specific form of deferred payment into account. BNPL service providers are therefore not subject to the supervisory rules of the Financial Supervision Act (Wft), as apply to other credit providers. The following occurred in the case that led to the judgments. In 2019, the consumer in question purchased products from an online store and chose to use the Afterpay payment method. The choice of deferred payment meant that the claim against the consumer was transferred by the online store to Afterpay (the BNPL service provider) and that Afterpay was entitled to collect the claim. If the consumer pays within the payment term, no interest or costs are charged by the BNPL provider.

Previous ruling by the Supreme Court in 2023

In its ruling from 2023, the Supreme Court already answered a number of preliminary questions about the application of the Consumer Credit Directive to BNPL service providers. The key question put to the Supreme Court was whether a BNPL agreement qualifies as a credit agreement within the meaning of Section 7.2A of the Dutch Civil Code.

According to the Supreme Court, the term ‘credit agreement’ must be interpreted broadly. If a consumer is allowed to defer payment until after the delivery of the purchased goods, this is in principle a credit agreement. The Supreme Court then discusses the exceptions to the applicability of Title 7.2A of the Dutch Civil Code. A credit agreement is exempt from the applicability of this title if the credit is completely free of charge, if no interest or other costs are charged, or if the credit must be repaid within three months and the costs are only ‘insignificant’. Whether the costs are ‘insignificant’ depends on the circumstances of the case, such as the absolute amount and the ratio to the total credit amount. According to the Supreme Court, when assessing whether the conditions for the exception are met, the concept of ‘total cost of the credit to the consumer’ must be considered, which must be interpreted broadly. Because this concept concerns the interpretation of EU law, the Supreme Court in turn asks the Court of Justice—in short—whether default interest and extrajudicial costs fall under the total cost of the credit.

Supreme Court ruling of June 27, 2025

In line with the response of the Court of Justice (ECLI:EU:C:2024:895), the Supreme Court responded that, when determining whether a credit is free of charge or involves insignificant costs pursuant to Section 7:58(2) of the Dutch Civil Code, default interest and extrajudicial costs should not be taken into account. It therefore does not matter whether they are payable under the law or under an agreement.

Revenue model based on consumer non-payment?

However, if the BNPL provider already anticipated at the time of concluding the credit agreement that the consumer would not meet their payment obligations and attempted to gain an economic advantage in this way (i.e., turned it into a “revenue model”), the default interest and extrajudicial costs can/must be taken into account. The court (of fact) must assess this on the basis of all the circumstances of the case. Relevant points to consider in that case are the legal or contractual nature of the interest, the costs of non-performance, the periods within which that interest and those costs become due and payable, and the amount of that interest and those costs.

 Explanation of ‘sufficient time’: when must pre-contractual information be provided?

In its judgment, the Supreme Court also explained the requirement of ‘sufficient time’ in Section 7:60 of the Dutch Civil Code. Section 7:60 of the Dutch Civil Code stipulates that the pre-contractual information referred to in Articles 5 and 6 of the Consumer Credit Directive must be provided to the consumer sufficiently in advance of the consumer being bound by it. The Supreme Court ruled that the explanation of ‘sufficient time’ (also) depends on the circumstances of the case, including, first and foremost, the degree of complexity of the credit agreement offered. The Supreme Court emphasizes that the fact that a consumer quickly decides to enter into a credit agreement does not imply that the pre-contractual information was not provided well in advance.

Ex officio assessment of creditworthiness

In addition, the Supreme Court confirmed in this judgment that the civil court must assess ex officio whether the BNPL provider or credit provider has actually carried out a creditworthiness assessment. In order to prevent excessive lending, lenders have a (pre-contractual) obligation under the Wft to obtain information about the consumer's creditworthiness. However, the Supreme Court adds that a court does not have to assess ex officio whether the lender should have been allowed to enter into the credit agreement for loans of less than EUR 1,000, because the lender did not have sufficient information about the consumer's financial position. Ultimately, it is up to the trial court to assess whether the lender has fulfilled its obligations under the Wft.

Implications for practice

The Supreme Court's rulings provide clarity for providers of short-term credit for which no or only insignificant costs are charged (including BNPL service providers) on the question of whether they can charge default interest and extrajudicial collection costs without falling under the consumer credit rules. If a BNPL service provider or short-term credit provider falls under these rules, this can have far-reaching consequences for its business operations. This will only be the case if the court rules that the lender's revenue model is focused on non-compliance by the consumer. The fact that lower courts may have different opinions on this is evident from two recent judgments – both concerning Klarna – by the District Court of Amsterdam (ECLI:NL:RBAMS:2025:1405) and the District Court of North Holland (ECLI:NL:RBNHO:2025:6515).

It is important to note that, from November 20, 2026, all BNPL service providers, among others, will also fall within the scope of the amended Consumer Credit Directive (the consultation on the implementation law closed on May 13, 2025). From (at least) November 20, 2026, BNPL service providers will therefore also have to comply with the pre-contractual information requirements.

In the event of a breach of the pre-contractual information requirements, a “penalty” (discount) will have to be applied to the consumer's payment obligation. 

Questions?

For the sake of completeness, we note that both judgments of the Supreme Court—in addition to the points mentioned above—also contain a number of more technical but practically relevant considerations. 

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