Germany

Status

Implementation underway.

Is the country considering regulation?

Yes, on 23 June 2025, the German Ministry of Justice published a draft bill to implement the revised EU Consumer Credit Directive (Directive (EU) 2023/2225 – "CCD2“) (the “Draft Bill”).

Current state of regulation regarding BNPL?

There is currently no particular regulation of BNPL in Germany. However, the provision of BNPL can already be covered by other regulation, including regulation of payment services, factoring or lending. Therefore, it is important to structure the BNPL scheme properly to avoid any regulatory pitfalls.

The regulation depends on the structure of the relevant BNPL scheme. If, for example, the merchant offers BNPL itself (i.e. a deferment of the purchase price), it is possible that the merchant stays outside the perimeter of regulation. Depending on the offer, there might be consumer related obligations, in particular the following: The provision of a loan to consumers or the deferment of a purchase price might face also certain information obligations, the requirement of credit worthiness checks and other consumer credit obligations. Currently, there is an exemption from those obligations if the loan amount is below EUR 200 or the loan is repayable within 3 months and bears only low costs.

Any third party (BNPL service provider) providing services to a merchant to enable BNPL needs to review whether there is any regulatory implication. If the BNPL service provider, for example, grants a loan to the customer and the merchant is directly paid from the loan, it is very likely that a licence for credit business is required. On the other hand, if the merchant grands the payment deferment and the BNPL service provider acquires the payment claim, this might constitute factoring (what constitutes a regulated financial service in Germany).
 

Outline the proposals to change regulation?

The Draft Bill proposes a significant expansion of German consumer credit law, extending its scope to achieve full harmonisation with CCD 2. The key proposed changes include:

1. The definition of consumer credit agreements (Verbraucherdarlehensverträge) is extended to include low-value loans under EUR 200, interest-free loans, and short-term credit with minimal costs – bringing many BNPL products within scope.
2. General and pre-contractual information duties are revised and expanded, with the introduction of standardised EU forms to enhance transparency.
3. Stricter Creditworthiness assessments to ensure loans are only granted if repayment is likely.
4. Obligation to offer relief to consumers in financial difficulty, generally before termination and at the latest before enforcement measures begin.
5. The consumer’s right of withdrawal will expire 12 months and 14 days after contract conclusion if proper instructions were provided, eliminating the previously indefinite period in case of insufficient notice.

The CCD2 requires Member States to implement its provisions uniformly, without national deviations. The Draft Bill reflects this. However, the CCD2 leaves room for discretion in certain areas. The draft makes use of these flexibilities in order to avoid "bureaucracy and overly burdensome requirements" — particularly in the following respects:

1. Regulatory obligations are to be transferred to intermediary institutions in order to relieve especially small merchants.
2. For credit types previously unregulated, a concise, one-page information sheet will be sufficient in the future.
3. The formal requirement of written form of the contract is replaced with the more flexible text form.
   While stricter advertising rules will apply, advertising that emphasises fast credit approval — which is often reasonable and in the interest of consumers — remains permitted

What if any will be the consequences of BNPL legislation on merchants, brokers and consumers.

The forthcoming Draft Bill to implement the CCD2 in Germany is expected to have a notable impact on the BNPL sector. For consumers, the new rules aim to significantly strengthen protection against over-indebtedness by introducing stricter creditworthiness assessments and mandatory relief measures in cases of financial hardship. BNPL products, which were previously often exempt from regulatory oversight due to their low value or interest-free nature, will now fall squarely within the scope of consumer credit regulation.

For merchants and brokers, the legislation introduces new compliance requirements while also seeking to reduce administrative burdens. Advertising standards will also be tightened to ensure consumers are adequately informed of the true costs of credit.

The Draft Bill remains open for feedback from regional governments, industry groups, and other stakeholders until 18 July 2025. A formal discussion in the German federal parliament (Bundestag) is anticipated to begin only after the parliamentary summer break ends in September, when critical responses and proposed adjustments will likely be taken up.

Last updated: 21 July 2025