Late payments have become a revenue line in parts of the buy now, pay later market. FCA research estimated that consumers paid about £39 million in BNPL late fees over a year, a figure that puts real weight behind a charge many shoppers may see as minor.
If you run a business with overdue invoices, that number can seem to support tougher collection tactics. It doesn’t. BNPL arrears and commercial invoice debt operate on different contracts, risks, and rules. Knowing where they overlap helps you pursue payment firmly without treating a late fee as a substitute for proper recovery.
What £39m in BNPL late fees actually measures
The £39 million figure relates to fees paid by BNPL customers after missed payments. It is not the value of goods left unpaid to retailers, nor is it a measure of what conventional collection agencies recover for suppliers.
In a typical BNPL transaction, the provider pays the retailer, less its commercial fee, and then collects instalments from the consumer. Once the sale completes, the retailer’s invoice may already be settled. The remaining debt usually sits between the customer and the BNPL provider.
That distinction matters if you are comparing your own aged debtor book with headlines about late charges. An unpaid £5,000 business invoice is a direct cash-flow issue for your company. A £6 missed-instalment fee is a contractual charge attached to a consumer credit agreement.
FCA consumer-arrears research found that 10% of BNPL transactions had at least one missed or late repayment in January 2023. However, only 2% of transactions had an instalment that incurred a late fee. The underlying research, set out in the FCA’s analysis of BNPL arrears, shows why a single headline should not be mistaken for the full scale of consumer debt.
Late fees vary between providers and products. The FCA’s Woolard Review recorded examples of charges ranging from £6 to £12, while some providers did not charge a late fee at all. The FCA’s later consultation stated that such fees are often around £5 to £10.
A charge is not automatically unlawful because a borrower missed a payment. The contract, how it was explained, the provider’s policies, and the treatment of the individual borrower all matter. Equally, a charge can become problematic when it arises from poor administration, unclear terms, or failure to respond properly to hardship.
A late fee is an additional contractual charge. It does not prove that a creditor has recovered the original debt, or that more assertive collection would be fair.
For your business, the useful lesson is simple. Clear payment terms, prompt reminders, and accurate records prevent disputes before they turn into costly recovery work.
BNPL late fees: why the revenue figure drew scrutiny
The FCA has said that late fees are a standard feature of many deferred-payment credit products. Its firm survey found that late fees accounted for 7% of total revenue for some firms in 2023, and more than 10% in some cases. That creates a legitimate regulatory question: could a lender’s income be linked too closely to customers missing payments?
The issue is not that every fee is a penalty in the legal sense. It is that a provider must not structure, market, or administer credit in a way that makes foreseeable customer harm an acceptable business outcome.
The regulator estimated that roughly 0.2 million consumers who miss BNPL repayments could pay between £1 million and £2 million each year in unexpected charges. Those estimates sit alongside the larger £39 million annual late-fee figure, which reflects fees paid across the market rather than a single firm’s published revenue.
For collectors, the important commercial reading is more restrained than the headline. A higher volume of missed payments does not make every account collectible. Some accounts involve a cancelled order, a return that has not been processed, a payment-system error, or genuine financial difficulty.
The FCA found cases where customers were charged after cancelling an online purchase because the retailer’s cancellation notification reached the BNPL provider too late. Its contract-terms intervention with BNPL firms led to refunds in appropriate cases. That is a useful warning for any creditor: reconcile operational data before contacting a debtor.
You should separate four questions before escalating an account:
- Is the balance correct, including payments, returns, credits, and any agreed reductions?
- Is the fee or interest charge supported by the contract or applicable law?
- Has the debtor raised a plausible dispute that needs investigation?
- Does the account show signs that a payment plan or pause is more suitable than immediate escalation?
A collection process that skips those checks often creates avoidable complaints and delays. It may also make an otherwise recoverable balance harder to collect.
Consumer arrears and unpaid business invoices are different debts
BNPL is consumer credit, even when its checkout process feels closer to a payment option than borrowing. The borrower is normally an individual buying goods or services for personal use. The provider must deal with affordability, customer understanding, complaints, and financial difficulty within the consumer-credit framework.
Your unpaid trade invoice is different. In B2B debt recovery, you are usually seeking payment from another business under a supply contract. The central questions are whether you delivered what you agreed, whether the invoice was validly issued, whether the due date passed, and whether the debtor has a genuine dispute.
That does not give you a free hand to add charges. Your contract may permit interest or recovery costs. In some qualifying commercial cases, the Late Payment of Commercial Debts (Interest) Act 1998 may allow statutory interest at 8 percentage points above the Bank of England base rate, plus fixed compensation of £40, £70, or £100 depending on the invoice value. The contract and circumstances matter, so you should check your position before demanding either.
A business debtor can still face real hardship. A small contractor may have cash-flow trouble, a sole trader may be personally exposed, and a property-related debt may involve additional protections. Firm contact remains appropriate when money is due, but it should be factual and proportionate.
If your business accepts BNPL at checkout, do not merge its arrears data with your ordinary accounts receivable ledger. Your finance team needs to know whether the provider has paid you, whether a customer refund is pending, and which party has the contractual right to pursue the consumer.
In practical terms, you should not send a debt recovery agency after a customer for a BNPL balance that belongs to the lender. You could expose your business to complaints, damage the customer relationship, and create confusion over authority.
On the other hand, an overdue invoice from a corporate customer is your debt to manage. Your evidence should include the contract or purchase order, the invoice, delivery proof or service records, correspondence, and a clean statement of account. Those documents give a collector something solid to work with.
FCA rules now change the BNPL collection environment
Since 15 July 2026, the FCA has regulated deferred-payment credit, commonly known as BNPL. The regulator’s BNPL regulation guidance for firms sets out the new framework and the steps firms must take where their products fall within scope.
The change does not ban credit, late-payment charges, or collections activity. It places more weight on responsible lending and fair treatment throughout the customer journey. Providers must assess creditworthiness, give customers clearer information, and meet conduct requirements when things go wrong.
Affordability checks are central. A lender should not rely on the apparent small size of each instalment while ignoring the customer’s wider commitments. The new framework gives consumers stronger protections, including access to the Financial Ombudsman Service for covered agreements. Fair4All Finance’s summary of the new rules explains why affordability assessment is now part of the BNPL decision process.
For a collections firm acting for a BNPL provider, the account file needs more than a name, balance, and payment date. It should show the agreement basis, instalment history, fees, customer contact, disputes, refunds, and any signs of vulnerability or difficulty.
Forbearance means giving reasonable support when a customer cannot pay as agreed. Depending on the facts, that may include a realistic repayment plan, a temporary pause, reconsideration of charges, or time to obtain debt advice. It does not mean writing off every debt. It means the response should fit the customer’s circumstances.
Legal analysis published before implementation also highlighted that third-party lender arrangements will generally fall within the regulated credit regime. The overview of finalised FCA BNPL rules is useful background when you need to understand why a provider’s collections process may now involve more checks.
If you collect consumer credit debts, use the lender’s approved processes and do not improvise fee demands. If you collect commercial debts, keep those files and communications separate. The standards differ, even though both require accuracy and respect.
What ethical debt recovery looks like after a missed payment
The £39 million late-fee figure should not push you towards harsher chasing. It should push creditors and agencies towards better account control. Many disputes begin because a customer cannot see how the requested balance was calculated.
Start with a complete account statement. Set out the original amount, invoice or agreement date, due date, payments received, credits, interest, fees, and current balance. If you add a charge, explain its basis in plain language. A debtor who can verify the figures is more likely to engage.
Then make early contact. A polite reminder shortly after the due date often works better than a formal demand issued weeks later. It also exposes errors, such as a missing purchase order, an invoice sent to the wrong inbox, or an agreed credit note that has not reached accounts.
When payment remains outstanding, set a clear deadline and explain the next sensible step. For a business invoice, that might be referral for debt recovery or a letter before action. For consumer credit, it may mean a regulated arrears process and a review of the customer’s ability to pay.
Avoid language that threatens consequences you cannot or will not take. Do not state that court action is inevitable, claim a right to charges that you have not established, or imply that a customer must borrow more money to pay you.
A responsible process usually follows this order:
- Confirm the debt, the contract, and the authority to pursue it.
- Invite the debtor to raise a dispute and investigate any credible evidence quickly.
- Offer a practical route to payment where the debt is admitted but cash is tight.
- Escalate through an experienced collector or legal route only when the file supports it.
That sequence protects your commercial position. It also reduces the chance that a disputed debt becomes an expensive argument about conduct rather than the original invoice.
Where the BNPL shift leaves a debt recovery agency
The new BNPL rules are likely to make consumer-credit collection files more compliance-heavy. A collector may receive fewer accounts that should never have been opened, yet the accounts that do reach arrears may need more careful handling.
That is not a weakness. It is a correction to a model where missed payments and fee income could become too closely connected. A reputable debt recovery agency should measure success through accurate resolution and sustainable payment, not the number of charges added to a ledger.
If you are appointing an agency for an unpaid business invoice, ask direct questions about its process. You need to know how it verifies the debt, handles disputes, stores personal data, communicates with debtors, and reports progress. Fee structures also matter. Some firms work on commission, others charge fixed fees, and legal action may carry separate costs.
You should also ask whether the agency understands your sector. Construction disputes can turn on valuations and retention clauses. Property arrears may require tenancy, lease, or service-charge records. International invoices may require local legal knowledge. Generic chasing scripts rarely resolve those cases well.
For debt recovery UK cases, the strongest instruction pack includes the signed agreement, purchase order, invoice, proof of delivery or completion, statement of account, reminder history, and any dispute correspondence. If you cannot support the balance, a collector cannot credibly demand it.
When your debt is aged, disputed, high-value, or crosses borders, Debt Recovery Hub can help you identify a specialist provider suited to the file. You remain in control of whether to appoint an introduced agency.
Keep fees separate from the real recovery objective
A late fee can encourage a customer to pay on time. However, it is a poor foundation for a collection strategy when the debt itself is unclear, unaffordable, or disputed. The FCA’s work shows why the source and treatment of fees now face closer scrutiny.
For your own overdue invoices, focus on the principal debt first. Confirm the evidence, state any interest or compensation lawfully, and give the debtor a credible route to resolve the matter. That approach protects cash flow without turning collection into a fee-generating exercise.
The £39 million BNPL figure is a reminder that small charges can add up across a market. Fair recovery begins with the opposite discipline: every pound requested should have a clear, defensible basis.
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