Due to technological progress and the effects of the COVID-19 pandemic, consumers have increasingly turned to online shopping. This was accompanied by the rapid development of new methods of short-term financing, such as Buy Now, Pay Later (BNPL) services, which allow customers to pay for purchases at a later date than the date of receipt. In Poland, financing is interest-free for a certain period, generally 30 days, after which interest charges apply.
Some deferred payment providers present their service as a convenient method of settling debts or a tool to streamline online shopping rather than a loan. This can be misleading for less informed consumers. Deferred payments are, in essence, a form of credit that can impact a consumer’s credit history.
Research firm The Business Research Company has demonstrated how the BNPL market is growing. According to their report, the global deferred payment market is expected to grow from USD 105.15 billion in 2022 to USD 155.79 billion in 2023 and is estimated to reach USD 744.06 billion by 2027. According to the European Retail Banking Radar 2023 report compiled by consulting firm Kearney, Poles are among the top users of deferred payments and 64% of Polish consumers have already taken advantage of BNPL or installment payment options. In Poland, the BNPL sector provided financing of approximately PLN 2.1 billion in 2022, marking an increase of 181% year-on-year. The value of financing in the traditional lending sector amounted to PLN 13.79 billion. The most popular providers of BNPL services include PayU, Twisto, PayPo, DotPay, and Allegro Pay, but banks also offer such products. For instance, PKO Bank Polski announced in August that 100,000 people have activated their PKO Place pozniej service, which was launched last November, and the total amount of granted loans is PLN 78.4 million.
The Polish BNPL regulatory environment is quite distinctive compared to other European countries, as well as Australia or New Zealand. BNPL providers in Poland rarely benefit from exceptions to the application of Polish consumer credit law, and therefore comply with the provisions thereof, including limits on interest and non-interest costs.
Despite the above, consumer loan companies, including BNPL providers, are currently not subject to supervision by the Polish Financial Supervision Authority (PFSA). They are only required to be listed in the register of loan institutions and therefore are not obliged to report the extent of their activities. The PFSA lacks the legal tools to compel the provision of information and explanations or to inspect the loan companies’ operation for compliance with the law.
However, recent changes (introduced at the end of 2022) in Poland’s consumer credit laws have tightened regulations. The act amending the laws to combat usury (the Anti-Usury Act) has introduced supervision of consumer credit providers by the PFSA, effective from January 1, 2024. Lending institutions, including BNPL providers, will be required to report data on the scale, structure, and nature of their loan portfolio to the PFSA. The Polish regulator will receive quarterly and annual reports from the lending institutions and will have the right to request additional information and make recommendations. In case of irregularities, the PFSA will be entitled to impose administrative fines of up to PLN 15 million (approximately EUR 3.3 million) on the loan company and up to PLN 150,000 (approximately EUR 33,500) on the board member directly responsible for the irregularities.
Furthermore, the Anti-Usury Act has imposed tighter restrictions on fees charged to borrowers and the criteria for assessing the consumer’s creditworthiness, which must be based on verified data sources, credit bureaus, and, in some cases, income and expense statements.
In summary, the Polish BNPL market is characterized by a comparatively restrictive regulatory environment, especially considering recent legal changes. Therefore, the planned amendments to the European Consumer Credit Directive (CCD II) may appear less relevant from the Polish perspective. However, this does not preclude the fact that Polish supervisory institutions, such as the PFSA and the Competition and Consumer Protection Office, should monitor the market and collaborate with each other, including in terms of educational and informational initiatives.
By Pawel Halwa, Managing Partner, and Weronika Kapica, Attorney at Law, Schoenherr
This article was originally published in Issue 10.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.