OCC offers compliance guidance to banks on ‘buy now, pay later’ loans

New guidance from the Treasury Department’s Office of the Comptroller of the Currency (OCC) advises banks to tailor their risk management strategies and lending oversight for “buy now, pay later” (BNPL) plans.

The OCC’s bulletin, released Wednesday, addressed risks posed by BNPL loans payable in four or fewer installments and carrying no finance charges. Loans with payment terms greater than four installments or that charge interest or carry other finance charges are considered by the OCC to be traditional and are not within the scope of the guidance.

The agency said BNPL loans are popular with tech-savvy customers and those with little or no credit history and are often associated with online purchases.