Introduction
The American Fintech Council (AFC) has formally objected to a proposed regulatory bulletin from Oregon’s Division of Financial Regulation that would bring buy-now-pay-later (BNPL) products under the state’s existing payday lending and consumer finance licensing framework. The council argues that applying rules designed for high-cost, open-ended payday credit to fixed-schedule, typically interest-free point-of-sale instalment products conflates two structurally distinct forms of credit, and it has called for a formal rulemaking process rather than a bulletin-based approach.
The dispute has relevance beyond Oregon. It reflects a broader, ongoing question facing regulators, BNPL providers, retailers and consumer-protection bodies across the United States: whether BNPL should be regulated under existing credit frameworks built for other products, or through purpose-built rules reflecting its distinct transaction structure. The outcome in Oregon, and in comparable state-level proceedings, will influence licensing costs and compliance complexity for BNPL providers operating across multiple US jurisdictions.
What the Proposed Bulletin Would Do
The Oregon Department of Consumer and Business Services issued a proposed bulletin that would extend the state’s payday and consumer finance licensing requirements to BNPL providers operating in Oregon. If implemented as drafted, BNPL companies would need to obtain licensing under a framework originally designed for high-cost, revolving payday credit products, rather than under rules specific to point-of-sale instalment financing.
The AFC, an industry association representing fintech companies, submitted a formal comment letter opposing this approach, arguing that BNPL’s underlying credit structure, fixed repayment schedules and, in most cases, no consumer interest charges, differs materially from the products the payday and consumer finance licensing regime was built to address.
How the AFC’s Objection Is Structured
The council raises three distinct arguments. First, it contends that merchant compensation, the fees BNPL providers collect from retailers for processing and distribution services, should not be classified as a consumer finance charge, since these fees are not interest charged to the consumer. This distinction has generally been accepted by regulators in other jurisdictions, though it remains contested and is the subject of ongoing federal-level debate.
Second, the AFC challenges the Division’s interpretation of the purchase money loan exclusion, arguing that BNPL products finance specific retail transactions at the point of sale and should be assessed based on that transaction-specific structure rather than on whether the credit is collateral-secured.
Third, the council objects to the Division’s use of a regulatory bulletin rather than formal rulemaking, arguing that a bulletin bypasses the transparent, stakeholder-driven comment process that would typically accompany a substantial expansion of licensing obligations.
Key Factors Shaping the Regulatory Landscape
Oregon’s proposed bulletin follows a broader pattern of state-level BNPL scrutiny that accelerated after the Consumer Financial Protection Bureau’s 2024 interpretive rule, which classified certain BNPL products as credit cards under the Truth in Lending Act. That federal action increased disclosure obligations for BNPL providers nationally and prompted several states to consider their own licensing frameworks, creating the current patchwork of state-by-state regulatory approaches.
Industry engagement strategy is a second relevant factor. The AFC’s early intervention in Oregon’s rulemaking process reflects a documented industry approach of engaging before licensing obligations are finalised, aiming to shape regulatory framing at the drafting stage rather than responding after rules take effect.
Costs, Impact and Implications
For BNPL providers operating in Oregon, the immediate implication of the bulletin proceeding as drafted is dual licensing exposure, requiring compliance with a payday and consumer finance framework in addition to any BNPL-specific obligations already in place. This carries direct compliance cost implications, including licensing fees, reporting requirements and potential restructuring of merchant fee arrangements if those fees are reclassified as consumer finance charges.
More broadly, the case illustrates a structural cost facing BNPL providers nationally: regulatory fragmentation across states, each potentially applying different licensing thresholds and classifications to a product operating on a broadly consistent economic model. This fragmentation increases the compliance burden for providers operating across multiple US states relative to a single harmonised federal or model-state framework.
Risks and Limitations
The Oregon Division of Financial Regulation has not publicly responded to the AFC’s letter, and the bulletin’s final form remains undetermined. Whether the council’s objections will result in a shift toward formal rulemaking, as it has requested, or whether Oregon will proceed with the bulletin as proposed, is not yet known.
The AFC’s position originates from an industry association representing fintech and BNPL companies with a direct commercial interest in the regulatory outcome; its arguments should be read alongside consumer-protection perspectives and the Division’s own regulatory rationale, neither of which is detailed in the AFC’s letter. The broader classification debate, over whether merchant fees constitute consumer finance charges, also remains unresolved at the federal level, meaning Oregon’s eventual approach may not settle the underlying legal question.
Future Outlook
The near-term marker to watch is whether the Oregon Division of Financial Regulation responds to the AFC’s letter and whether it opts for formal rulemaking with a defined comment period, the outcome the council has stated as its preferred result. More broadly, Oregon’s decision may serve as a reference point for other states considering similar licensing extensions, either reinforcing the trend toward applying existing consumer finance frameworks to BNPL or contributing to momentum for BNPL-specific regulatory categories. No federal resolution to the merchant-fee classification question has been established at this stage.
Conclusion
The AFC’s challenge to Oregon’s proposed BNPL bulletin centres on a structural disagreement over whether buy-now-pay-later products should be regulated under frameworks built for payday lending or through rules reflecting their distinct, fixed-schedule, point-of-sale structure. The dispute reflects a broader pattern of state-level regulatory fragmentation following the CFPB’s 2024 interpretive rule, with the outcome in Oregon likely to inform how other states approach BNPL licensing going forward.
