Reviewing a buy now pay later merchant agreement

A buy now pay later merchant agreement lets a retailer offer customers instalment payments funded by the provider, in return for a fee on every transaction that is higher than a card fee, and on terms that decide what the retailer must refund, what it may say to customers about paying later, and what customer data the provider takes. The provider's product sits in a regulated space, and the retailer's advertising of it can be a financial promotion. I review the agreement from the merchant's side and return it marked up with a written explanation of what it commits the business to and the terms worth asking to change, for a fixed fee of £495 in three working days.

Who this is for

Online and in-store retailers, service businesses and course providers in England and Wales adding a buy now pay later, pay in three or instalment option at checkout through a third-party provider, and want to know what the agreement commits them to and how it affects their own dealings with customers. The merchant and the provider are businesses; the customer's agreement is with the provider.

What to look for in a buy now pay later merchant agreement

The regulated product and the merchant's own position

Buy now pay later credit has been provided under the exemption for interest-free, short-term credit in article 60F of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, and legislation has been made to bring it within Financial Conduct Authority regulation. The provider is the lender and the merchant is not, but the merchant's promotion of the product and its role at checkout are affected. The review checks what the agreement says about the provider's authorisation, what it requires the merchant to do when the rules change, and that the merchant is not made responsible for the provider's compliance.

Fees, settlement and the provider's right to change them

The provider deducts a percentage of each transaction plus a fixed fee and settles the balance to the merchant within a stated period, taking the customer's credit risk in return. The review checks the fee schedule, the provider's right to change fees on notice, the settlement timing and the provider's right to delay or withhold settlement for suspected fraud or elevated returns, and asks for fee changes to carry a termination right. The Late Payment of Commercial Debts (Interest) Act 1998 applies to sums the provider owes the merchant.

Refunds, returns, disputes and who pays

When a customer returns goods, the merchant refunds the provider, which refunds the customer, and the provider will charge back or offset the sum against future settlements. The review checks the refund procedure and timing, the fee the provider keeps on a refunded sale, the treatment of partial refunds, the dispute process where the customer claims the goods did not arrive or were defective, and the merchant's own obligations to consumers under the Consumer Rights Act 2015, which the provider's process must not cut across. Where the credit is regulated, section 75 of the Consumer Credit Act 1974 can make the lender liable with the merchant for the merchant's breach, and the agreement will pass that cost back.

What the merchant may say: financial promotions and drip pricing

The merchant advertises the provider's product on its website and at checkout, and a communication inviting customers to take credit can be a financial promotion restricted by section 21 of the Financial Services and Markets Act 2000 unless made or approved by an authorised person or exempt. The review checks that the agreement supplies approved wording and requires the merchant to use only that, that the provider takes responsibility for its accuracy, and that the checkout shows the total price without the instalment option obscuring it, since section 230 of the Digital Markets, Competition and Consumers Act 2024 requires the headline price shown to consumers to include all mandatory charges.

Customer data, marketing and the provider's own relationship with your customers

The provider collects the customer's details at checkout, runs affordability and identity checks and builds its own relationship with the customer through its app. The review checks the data terms: each party is a controller under the UK GDPR and the Data Protection Act 2018 for its own purposes, the merchant should not be responsible for the provider's privacy information, and the provider's right to market its own services or other merchants' offers to the merchant's customers should be restricted. Marketing to the customer by email needs consent or the soft opt-in under regulation 22 of the Privacy and Electronic Communications (EC Directive) Regulations 2003, and the provider's checkout must not obtain it on the merchant's behalf without saying so.

Exclusivity, integration, branding and termination

Providers ask for prominence or exclusivity at checkout, for the merchant to display the provider's branding and messaging, and for a minimum term. The review checks any exclusivity against the merchant's other payment options, the integration and the merchant's obligations for it, the branding requirements and the merchant's approval over how its own brand appears in the provider's app, and the termination provisions, which should let the merchant leave on notice, with refunds and disputes on existing transactions continuing to be handled after termination.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

Do we need to be FCA authorised to offer buy now pay later at checkout?

The provider is the lender and the merchant does not lend, but promoting credit can be a financial promotion that needs to be made or approved by an authorised person unless an exemption applies. The review checks that the agreement gives you approved wording and puts responsibility for it on the provider.

A customer returned the goods but the provider is still charging us the fee. Is that right?

That depends on the fee terms, and many providers keep the transaction fee on refunded sales. The review checks the refund and fee provisions and asks for the fee to be refunded or credited on a returned sale, and for partial refunds to be handled proportionately.

Can the provider market to our customers?

Under the provider's terms it can, through its own app and emails, as a controller in its own right. The review checks the data terms and asks for the provider's marketing to your customers to be limited to its own product and not extended to other merchants' offers.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Data protection agreements and privacy terms, £795
• Reviewing a merchant services or card terminal agreement
• Reviewing an EPOS or till system contract

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.