New rules for fair lending: The Consumer Credit Directive CCD2 at a glance
New rules for fair lending: The Consumer Credit Directive CCD2 at a glance
Buy Now Pay Later (BNPL) has become a firmly established part of many e-commerce offerings in recent years. It is convenient and popular with consumers, and has so far been barely regulated. That is now changing: With the publication of the Consumer Credit Directive II (CCD2) on October 30, 2023, the EU has created, for the first time, a binding legal framework that also applies to digital deferred payment models such as BNPL.
At the heart of the directive are improved consumer protection, transparent disclosure obligations, and mandatory creditworthiness assessments. The directive must be transposed into national law by November 20, 2025. Until then, BNPL providers, embedded finance platforms, and traditional lenders alike are required to adapt their processes to the new requirements. Time is short – especially for providers still operating today without structured credit checks.
The key elements of CCD2
Compared to the previous directive, CCD2 significantly expands its scope. It will apply to a wide range of credit agreements – from small loans up to an amount of €100,000 –and, for the first time, will also cover digital business models such as “Buy Now Pay Later.” This is particularly relevant for merchants and payment providers who until now have not been subject to regulatory requirements for creditworthiness assessments.
Key innovations at a glance:
- Consumers are to be better protected against over-indebtedness through clear disclosure obligations and a standardized right of withdrawal.
- Lenders must ensure that all credit terms are communicated transparently and clearly before the contract is concluded.
- The increasing digitization of the credit market is explicitly addressed – including new communication channels and contract conclusions via digital platforms.
- Creditworthiness assessments will become mandatory even for small amounts.
- The directive grants member states room for maneuver in its implementation – for example, in the permissible assessment procedures or in the format of consumer disclosures.
A particularly important aspect of CCD2 is the mandatory creditworthiness assessment – prior to every contract conclusion. The aim is to ensure that consumers only receive credit that corresponds to their financial capacity. This applies not only to traditional loans but also to payment models with deferred repayment.
In practice, this means that BNPL providers and e-commerce merchants will in the future have to check whether their customers are able to pay the agreed amounts on time. Simply granting deferred payment without taking relevant credit data into account will no longer be sufficient.
How finAPI supports the implementation of CCD2
With the Digital Account Check (via API implementation) and the KreditCheck (zero-integration solution), finAPI already offers two solutions that meet the requirements of CCD2 today. By digitally analysing a customer’s current account transactions, creditworthiness can be assessed precisely within seconds. In real time, account data, transaction history, and payment behaviour are analysed, enabling a well-founded assessment of creditworthiness – digital, data-driven, and in compliance with data protection regulations.
Key functions of finAPI’s digital account check:
- Analysis of income, expenditure, and potential risk factors such as returned debits to detect potential payment difficulties
- Automatic categorisation of transactions to assess financial situations
- Optional integration of external credit bureaus such as SCHUFA (query via API interface)
- Easy integration into digital credit processes
- GDPR-compliant and TÜV-certified data protection and security
For BNPL and e-commerce providers, this means that creditworthiness checks can be seamlessly integrated into existing digital processes, already fulfilling tomorrow’s requirements today.
Conclusion: The clock is ticking
CCD2 is more than a formal directive. It represents a new regulatory mindset in the European credit market. Creditworthiness assessments, transparency obligations, and digital distribution models will no longer be considered separately. Those who act early will not only be able to comply with the upcoming requirements but also use them as an opportunity to create more efficient and customer-friendly processes. With its digital account check, finAPI already provides the technological foundation to implement this transformation in a legally compliant and data-driven way – for banks, fintechs, BNPL providers, and digital merchants alike.
Do you have any questions about digital account checks or our KreditCheck?
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