Oregon Under Pressure: Fintech Lobbyist Group Demands Rethink on BNPL Licensing Rules

The American Fintech Council (AFC) has formally challenged a proposed bulletin from Oregon’s Division of Financial Regulation, which seeks to categorize buy-now-pay-later (BNPL) products under the state's existing payday lending and consumer finance licensing frameworks. The AFC strongly argues that this approach incorrectly conflates two fundamentally distinct credit structures and advocates for a dedicated rulemaking process to be established before any new compliance obligations are imposed on BNPL providers.

The bulletin, issued by the Oregon Department of Consumer and Business Services, intends to extend existing state payday and consumer finance licensing requirements to all BNPL providers operating within Oregon. However, the AFC contends that regulations specifically designed for high-cost, open-ended payday credit are entirely unsuitable for point-of-sale installment products like BNPL. These BNPL products typically feature fixed repayment schedules and, in the majority of cases, offer zero interest to the consumer.

Phil Goldfeder, CEO of the AFC, outlined the council's core arguments, raising three substantive objections. Firstly, the AFC asserts that merchant compensation arrangements—the fees collected by BNPL providers from retailers—should not be classified as consumer finance charges. Instead, these fees are viewed as payments for processing and distribution services, rather than interest on credit extended directly to consumers. This distinction has generally been accepted by regulators in other jurisdictions, though it remains a subject of ongoing federal debate.

Secondly, the AFC disputes the Division’s interpretation of the purchase money loan exclusion. It argues that BNPL products are designed to finance specific retail transactions at the point of sale, and therefore, their structure should be evaluated based on these transaction-specific characteristics, rather than solely on whether they are secured by collateral.

Thirdly, and with significant implications for the industry, the AFC warns that bypassing a formal rulemaking process in favor of a regulatory bulletin sidesteps the transparent, stakeholder-driven engagement that is crucial for what amounts to a substantial expansion of licensing obligations. Both Phil Goldfeder and Ian P. Moloney, the AFC’s chief policy officer, emphasized that pay-over-time options provide consumers with clear terms and predictable repayment schedules as a viable alternative to traditional credit, urging Oregon’s approach to recognize BNPL's inherently distinct structure.

Oregon’s proposed bulletin is part of a broader trend of increased state-level scrutiny on BNPL, a movement that has gained momentum since the Consumer Financial Protection Bureau (CFPB) issued its 2024 interpretive rule. This federal action classified certain BNPL products as credit cards under the Truth in Lending Act, thereby pushing providers toward greater national disclosure obligations. Following this, several states have moved to layer on their own specific licensing requirements.

The AFC’s intervention highlights a wider industry strategy: proactively engaging in state rulemaking processes to help shape the regulatory framework before new obligations are solidified. For BNPL providers operating in Oregon, the immediate risk is potential dual licensing exposure if the bulletin is implemented as drafted. The longer-term concern for the industry is the risk of regulatory fragmentation across various US states, each potentially applying different licensing thresholds to products that fundamentally operate on a consistent economic model. As of now, the Division of Financial Regulation has not publicly responded to the AFC’s letter. The council's preferred resolution is a formal rulemaking process with a clearly defined comment period, which it believes would provide the industry with a more durable and legally defensible framework for future planning.