Chapter 5 · Mandatory from 20 Nov 2026
Pay later and instalments: what changes on 20 November
From 20 November 2026, EU member states have to apply new consumer credit rules. Pay-later and instalment offers through providers like Klarna or PayPal then count as credit, even without interest and even for small amounts. Most of the credit obligations sit with the payment provider. Three things stay with you: your advertising, your own invoice payment option and a clean checkout.
Last checked: · A reference, not legal advice.
The essentials
- From
- 20 November 2026.
- What is new
- Deferred payment and instalments are consumer credit even without interest, without fees and below €200.
- Who carries the credit rules
- The provider that grants the credit: credit check, pre-contract information, right of withdrawal.
- What is on you
- Your advertising. Ads for pay later or instalments need a warning like “Attention! Borrowing money costs money”.
- Your own invoice option
- Stays exempt if you defer payment yourself, charge nothing for it and give at most 50 days. Large online sellers: at most 14 days.
- Not allowed
- A credit agreement through a pre-ticked box. Ads that present credit as a way to have more money.
What changes
Until now, the Consumer Credit Directive left out a lot of what online shops use: credit below €200, credit free of interest and charges, and credit repaid within three months with only small charges. Many pay-later products lived in that gap: 30 days to pay, no interest, no fee.
Directive (EU) 2023/2225, known as CCD II, closes it. Member states apply it from 20 November 2026. Buy now pay later offered by a third party, interest-free instalments and small loans are now in scope. What stays out is deferred payment granted by the seller itself, under strict conditions.
Germany has transposed the directive by a law of 12 May 2026. Its consumer credit part enters into force on 20 November 2026. Other member states have their own transposition acts; the details below follow the directive, with the German law as an example.
Your own invoice payment option
If you let customers pay by invoice yourself, with no payment provider in between, it is still not credit as long as all four conditions are met.
The rule is stricter for large online sellers, meaning any business that is not a small or medium-sized enterprise under the EU definition. For them the exemption only covers at most 14 days to pay, and only if no third party buys the receivable either.
If you charge a fee for paying by invoice or give a longer period, you become a creditor yourself, with all the credit obligations from the credit check to the pre-contract information.
- You grant the payment period yourself. No third party offers the customer credit.
- The customer pays nothing extra for it: no interest, no invoice fee.
- Full payment is due within 50 days of delivery.
- Late payment only leads to limited costs under national law.
Open or disputed
- Neither the directive nor the German law puts a euro figure on “limited costs” for late payment. Normal reminder fees are likely fine; there is no fixed number.
- Factoring for small and medium-sized shops: the condition there is that no third party offers the customer credit. The directive only rules out a third party buying the receivable for large online sellers. Ask your factoring provider how they classify their product.
Klarna, PayPal and co.: who carries what
When a payment provider defers the price or offers instalments, it is the creditor. It checks creditworthiness, gives the required credit information and grants the right to withdraw from the credit.
You sell goods and offer the payment method on the side, so you act at most as a credit intermediary “in an ancillary capacity”. The directive does not make you give the pre-contract credit information yourself. The creditor has to make sure your customer gets it.
Credit intermediaries need a licence or registration. Member states may exempt small and medium-sized sellers acting only in an ancillary capacity. Germany does: small and medium-sized sellers need no intermediary licence if they only arrange financing for their own sales. Large sellers in Germany have to apply by 31 May 2027.
What appears in the provider’s payment window is the provider’s responsibility. Ask yours whether you need to update anything in your shop before 20 November.
Open or disputed
- Whether a large shop with an integrated provider counts as an intermediary at all depends, among other things, on whether it receives payment or another benefit for it. If you are not a small or medium-sized business, have your contract checked.
- Licensing exemptions are a member state option. Outside Germany, check your own country’s transposition act.
Advertising: the warning
Any advertising for credit must carry a clear and prominent warning that borrowing costs money, using “Attention! Borrowing money costs money” or an equivalent wording in your language. Since interest-free pay later is now credit, this applies to it as well.
If your ad mentions costs, such as “0% interest” or “3 instalments of €33”, you also need the standard information with a representative example: borrowing rate, total amount of credit and annual percentage rate, and where relevant the duration, total amount payable, instalment amount, cash price and any down payment.
Also banned is advertising that
- suggests credit would improve the customer’s financial situation,
- says existing credit or entries in credit databases have little or no effect on the application,
- falsely suggests credit adds to their funds, replaces savings or raises their standard of living.
Open or disputed
- Whether a provider’s logo in the list of payment methods at checkout already counts as credit advertising has not been decided. For banners, product pages saying “buy now, pay later” and posts on Instagram or TikTok, it very likely does. That is where the warning belongs.
What to do before 20 November
List your payment methods
Which invoice, pay-later and instalment offers run in your shop, and through which provider?
Check your own invoice option
At most 50 days to pay, 14 for large online sellers. No fee. No third party offering the customer credit. If something does not fit, change it.
Review your ads
Banners, product pages, newsletters and posts that mention pay later or instalments: add the warning, no promises of more money, and the standard information with an example whenever you mention costs.
Test the checkout
The credit must not be agreed through a pre-ticked box. After every update, check that your provider’s plugin is current.
Ask your provider
What are they changing for 20 November, and what do they expect from you? Get it in writing.
Sources
Questions about this chapter
Do I have to switch off Klarna or PayPal Pay Later?
No. The payment methods stay allowed. What is new is that the provider has to treat them as credit, with a credit check and credit information. For you, the main change is advertising.
Is my own pay-by-invoice option now credit?
Not if you defer payment yourself, charge nothing, give at most 50 days and late payment only leads to limited costs. Large online sellers: at most 14 days, and no third party may buy the receivable.
Can I charge a fee for paying by invoice?
Then the deferral is no longer free and the exemption no longer applies. You would be a creditor yourself, with all obligations. Work out first whether the fee is worth it.
Does this apply to small amounts too?
Yes. The €200 threshold is gone. A €25 order that a provider lets the customer pay in 30 days is credit.
Do I need the warning on Instagram and TikTok?
If the post advertises pay later or instalments, yes. The rule covers advertising in general, not just your shop.
I sell outside Germany. Does this apply to me?
The directive applies in every EU member state from 20 November 2026. Some details, like licensing exemptions and extra advertising bans, are up to each country. Check your national transposition act.
Is this legal advice?
No. It is the current state with sources and dates. For your specific case, ask a lawyer or your trade association.
Related rules
- Chapter 9E-invoicing Selling to businesses in Germany with more than €800,000 turnover last year means issuing e-invoices from 2027.
- Chapter 2The withdrawal button Customers must be able to withdraw from an online purchase via “withdraw from contract” in two clicks, with an acknowledgement.
- Chapter 3Green claims “Climate neutral” based on offsetting is banned, and so are unproven “eco-friendly” claims and self-made labels.