UK launch choices for a South African BNPL business

The recommended first product puts the credit agreement with the UK lender. The South African company supplies the checkout integration, decision-support software and technical maintenance. Its contract and production access must preserve that allocation throughout repayment, refunds and financial difficulty.

Executive Summary

• Qualifying third-party, interest-free checkout credit is now regulated deferred payment credit, or DPC. Genuine merchant lending can remain exempt, but a prearranged lender purchase and resale of the goods does not recreate that exemption. (Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 (RAO), art 60F(2), (7A)–(7C).)
• An own-lending launch needs the company's effective authorisation or a separately established statutory exemption. A charge-free appointed-representative route can be available, subject to its conditions. New entrants cannot now obtain DPC temporary permission. (FSMA 2000, ss 19 and 39; SI 2001/1217, reg 2(1)(cd); SI 2025/859, arts 8–12.)
• Broking qualifying DPC is excluded from credit-broking regulation. Financial promotions, debt collection and administration require separate assessments. An authorised lender's vendor contract does not extend its permissions to the supplier. (RAO, arts 36FB and 39F–39H; FSMA 2000, s 21.)
• The lender remains responsible for creditworthiness, disclosures, customer support and complaints. Merchant contracts must support refunds and statutory customer claims without making those rights depend on merchant reimbursement. (FCA CONC 1.2.2R, 4.2A and 5.2A; DISP 1.6.2R; Consumer Credit Act 1974, s 75.)
• South African credit scope depends on the agreement and its territorial connection. Data processing, software licensing and outward funding also need separate South African clearance. Relevant domestic BNPL reporting preparations are due by 31 January 2027. (National Credit Act 34 of 2005, ss 4, 8 and 40; Protection of Personal Information Act 4 of 2013 (POPIA), ss 3 and 72; SARB Currency and Exchanges Manual for Authorised Dealers, B.2(A) and B.2(C); NCR Guideline 006/2026, cl 7.)

Define the checkout debt before choosing the business model

The product specification should identify the merchant, contractual lender, borrower, cash price, credit amount and repayment schedule. It must also identify who advances funds, owns the receivable, receives each charge and can change the customer's obligations. Funding and debt ownership can be separated commercially, but each retained legal function needs its own assessment. (RAO, arts 60B and 60L.)

For the first release, use a defined unsecured fixed-sum purchase-credit product. The DPC analysis concerns borrower-lender-supplier credit repayable in no more than 12 payments within 12 months, without interest or other charges for the credit. Review compulsory subscriptions and customer service fees as part of the real price of obtaining credit. Genuine default charges require separate disclosure and fairness controls; their presence does not automatically remove an agreement from DPC. (RAO, art 60F(2)(a)–(d); FCA CONC 4.2A.5R(1)(f) and 7.7.5R.)

An app showing several purchases does not establish whether each creates a separate fixed-sum agreement or uses one running-account facility. Resolve that point in the customer terms and ledger. A running-account product has a different article 60F(3) exemption test. Interest-bearing credit, longer repayment schedules and additional customer charges require a fresh classification; failing the DPC definition does not establish that credit is unregulated. (RAO, arts 60B, 60F and 60L.)

Apply the UK rules already in force

Since 15 July 2026, article 60F(7A) has removed the relevant exemption for qualifying agreements where lender and supplier differ. It also catches the specified arrangement where a lender buys goods from the merchant and resells them to the borrower. Making the lender the seller on paper therefore does not necessarily preserve merchant-credit exemption. (RAO, art 60F(7A); Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025, SI 2025/859, arts 1 and 3.)

A merchant financing its own genuine sales can still satisfy article 60F(2). Every condition must hold, including the exclusions in paragraph (7). Separate savings concern insurance premiums, qualifying employer arrangements and specified social-landlord transactions. Ordinary consumer checkout lending by an independent platform does not acquire those savings simply through a merchant relationship. (RAO, art 60F(2), (7) and (7B).)

Agreements entered before regulation day remain outside the new DPC perimeter where they qualified for the former exemption. A lender must distinguish that legacy book from new agreements. Reusing an old customer account does not make a new purchase agreement a pre-July agreement. Third-party collection and administration of legacy debt still require separate assessment. (RAO, arts 39F–39H and 60F(7A); FCA, Regulating Buy Now Pay Later, updated 15 July 2026.)

The temporary-permission registration period ran from 15 May to 1 July 2026. Eligibility also depended on qualifying activity on 15 July 2025 and the statutory notification conditions. A business entering the UK now cannot use that expired registration route. Registered firms have a statutory full-application deadline of 15 January 2027; temporary status is not indefinite. Existing full permissions must also be checked for their activities, limitations and requirements. (SI 2025/859, arts 6A and 8–12, as amended by SI 2025/1154; FCA DPC temporary-permission directions, C–D.)

UK territorial scope requires analysis of the actual business, including where customer-facing functions and decisions occur. South African incorporation and an offshore server do not establish an exemption. FCA guidance recognises that an overseas firm can conduct UK activity through communications without a UK establishment. The recommended structure uses a UK-established lender and keeps the South African company's work within a defined technical service. (FSMA 2000, ss 19, 22 and 418; FCA PERG 2.4.3G–2.4.6G.)

Allocate lending and servicing to the entity that can perform them

Under own lending, the company enters the credit agreement and carries the lender's rights and duties. It needs effective permission or an applicable exemption for those functions before beginning the regulated activity. An application, UK incorporation or South African registration does not authorise a UK launch. The lender's own collection and administration can fall within article 39H exclusions, so these should not automatically be described as additional permissions in every lender application. (FSMA 2000, s 19; RAO, arts 39H and 60B.)

A valid appointed-representative arrangement is a separate possibility for qualifying interest-free and charge-free credit. It needs an eligible principal, the prescribed contract, written acceptance of responsibility and effective supervision. The product's charges and the appointment must satisfy the specific provisions. That structure changes the parties' responsibilities and cannot be assumed from a software or funding agreement. (FSMA 2000, s 39; Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001, SI 2001/1217, regs 2(1)(cd) and 3; FCA SUP 12.4–12.5.)

Under the recommended supplier model, the UK lender contracts with the borrower, controls underwriting and commits the credit. The South African company can calculate scores and implement lender-approved rules. The lender must control material model changes, approve the lending policy and retain the records supporting each decision. The supplier should receive payment for its contracted services without acquiring borrower repayment rights. These are proposed contractual and operating controls for keeping its role technical. (RAO, art 60B; FCA CONC 1.2.2R and 5.2A.)

Buying the receivables later requires another assessment. Exercising or holding the right to exercise lender rights can engage article 60B(2). Articles 60I and 60J contain exclusions for specified arrangements with appropriately authorised persons. Those exclusions do not authorise origination under article 60B(1), or automatically remove separate debt-collection activities. The proposed launch should leave the receivables with the lender until any acquisition structure has been reviewed. (RAO, arts 60B and 60I–60J.)

Credit broking of qualifying DPC is excluded by article 36FB, including after the later amendment removed the domestic-premises distinction. That exclusion can cover checkout introductions and application assistance within its terms. It does not extend to introductions for every other credit product the platform might add. (RAO, arts 36A and 36FB; SI 2025/1154, art 2(2).)

Financial promotions remain separate. An unauthorised merchant or supplier communicating an invitation to take DPC needs a lawful section 21 route. The introductions exemption was specifically restricted for DPC. Use promotions prepared and approved by the lender, with controlled versions and no unauthorised local edits. Approval of third-party-prepared material requires the approver's permission or an applicable exemption from the approval gateway. (FSMA 2000, ss 21 and 55NA; Financial Promotion Order 2005, art 15(1A)(ba); SI 2023/966, reg 3.)

Servicing also follows the activity performed. A supplier operating demands for payment can conduct debt collecting; performing duties or exercising rights for the lender can involve debt administration. Sending repayments directly to the lender does not settle that classification. Keep customer demands, contractual notices, repayment changes and forbearance decisions with the lender or an appropriately permitted service provider. Expansion into supplier-operated collections needs an effective permission or representative route before launch. Licentium's debt-collection supplier analysis examines that boundary. (RAO, arts 39F–39H; FSMA 2000, s 39; SI 2001/1217, reg 2(1)(af)–(ag).)

Payment functions need their own classification if the platform receives settlement money or initiates bank payments. The technical-service exclusion requires no possession of transferred funds and excludes payment-initiation and account-information services. Keep payment execution with the lender's appropriate payment providers. The UK checkout payment analysis explains the additional functions that change this assessment. (Payment Services Regulations 2017, SI 2017/752, Sch 1, paras 1 and 2(j).)

Build customer duties and South African controls into the service

The lender must assess creditworthiness before each DPC agreement, including affordability risk. Small agreements of £50 or less are included. The depth of assessment must be proportionate to the individual circumstances; previous successful payments or a merchant's willingness to sell cannot replace it. The decision record should show the information considered, other commitments, repeat borrowing and the reason for approval or refusal. (Consumer Credit Act 1974 (CCA), s 17; FCA CONC 5.2A.4R–5.2A.12R and 5.2A.20R–5.2A.22G.)

Use the DPC-specific disclosure rules. Before agreement, the lender must give the key information and give or make available the required additional information. These cover the credit amount, schedule, cash price, missed-payment consequences, lender and supplier, and the interaction between returns and credit. Immediately after entry, give or make available the agreement and required information in a durable medium. The statutory reforms disapply specified CCA formalities; copying a conventional loan template does not establish compliance. (SI 2025/859, art 2; FCA CONC 4.2A.3R–4.2A.6R.)

The customer flow must also explain applicable withdrawal and early-payment rights. Section 66A's 14-day credit-withdrawal right carries a repayment obligation; it does not itself cancel the underlying purchase. After a missed capital payment, CONC 7.20 requires prompt information about the missed payment and its consequences. The lender must give the required reasonable notice before specified enforcement actions, provide appropriate forbearance and investigate potentially valid debt disputes. (CCA, s 66A; FCA CONC 7.3, 7.14 and 7.20.)

The lender should own the complaints process and provide accessible human support for payment difficulty and contested decisions. Suppliers can route enquiries and provide technical assistance under an agreed service schedule. For complaints within DISP, the ordinary deadline is eight weeks for a final response or the prescribed delay response with Ombudsman rights. Eligible complaints concerning the UK lender can reach the Financial Ombudsman Service. Outsourcing support leaves the lender's regulatory responsibilities in place. (FCA CONC 1.2.2R; PRIN 2A.6; DISP 1.6.1R–1.6.2R and 2.6.1R.)

Merchant claims need an operational route. For a qualifying debtor-creditor-supplier agreement, section 75 makes the lender jointly and severally liable for qualifying supplier misrepresentation or breach. Its cash-price test concerns a single item costing more than £100 and no more than £30,000, with the other statutory conditions and exclusions. The amount financed is not the same test. Other transactions require their own analysis, including section 75A where applicable. (CCA, ss 12, 75 and 75A.)

The merchant agreement should require timely delivery evidence, cancellation and return information, refund reconciliation and cooperation with claims. Agree indemnities and settlement adjustments, but preserve the lender's ability to resolve the customer's claim before recovering from the merchant. The software should prevent duplicate collection and reflect approved refunds and dispute holds across every channel. Those controls implement the proposed operating model; the indemnity does not remove statutory customer rights. (CCA, s 75(1)–(2); FCA CONC 7.14.)

South African credit law requires a separate territorial and product assessment. The National Credit Act applies, subject to its exclusions, to arm's-length credit agreements made within or having an effect within South Africa. Review contract formation, local decision-making, funding, borrowers and performance. A UK-only customer book is not automatically outside the Act because repayment occurs abroad. (National Credit Act 34 of 2005 (NCA), s 4(1).)

The section 8 classification then matters. Certain deferred-payment arrangements require a fee, charge or interest to fall within the relevant credit category; default charges can raise separate incidental-credit questions. The registration threshold is nil for outstanding principal debt counted under section 40, which excludes incidental credit. Obtain registration before the activity requiring it, and apply the relevant responsible-lending duties. A supplier that merely provides software does not become the creditor through that service alone. (NCA, ss 1, 8, 40–42 and 81–82; National Credit Amendment Act 19 of 2014, ss 10–11; GN 513, GG 39981, 11 May 2016.)

For South African BNPL activity within the NCR reporting guideline, system preparation must finish by 31 January 2027 and reporting begins on 1 February 2027. The guideline covers credit providers, credit bureaus and defined data providers, including the specified payment-profile access condition. Assess that scope and the data being reported; the guideline does not establish that every UK-only receivable must be reported in South Africa. Credit-provider activity also requires a separate assessment under the Financial Intelligence Centre Act. (NCR Guideline 006/2026, cls 1, 3.3 and 7; FIC Act 38 of 2001, Sch 1, item 11.)

Map the lender's controller role and the supplier's processing role by their actual decisions. Apply POPIA's territorial test, security and operator-contract duties to the South African processing, and section 72 to relevant outward transfers. Remote access from South Africa by a separate company to the UK lender's data can be a restricted UK transfer. South Africa has no UK adequacy status. Complete the appropriate UK transfer instrument and the statutory data-protection assessment before live access. (POPIA, ss 3, 19–22 and 72; UK GDPR, arts 28, 44A and 46.)

The contract should control subprocessors, retention, incident reporting, audit access and reuse of borrower data. Significant solely automated credit decisions require the current UK safeguards, including information, representations, human intervention and challenge. South Africa's separate automated-decision provisions also require assessment where POPIA applies. (UK GDPR, arts 22A–22C and 28; POPIA, s 71.)

Software export also has an exchange-control dimension. Where the arrangement licenses South African-owned intellectual property to a non-resident, obtain the applicable Authorised Dealer approval and meet its documentation and payment conditions. An IP transfer or outward funding arrangement can need a different approval. A corporate foreign-investment allowance does not automatically authorise direct consumer lending abroad. The company should present the licence, ownership record, fees and proposed funds flow to its Authorised Dealer before implementation. (Exchange Control Regulations 1961, reg 10(1)(c); SARB Currency and Exchanges Manual for Authorised Dealers, version 8 October 2026, B.2(A)(ii)–(v) and B.2(C)(i).)

Launch the defined supplier service after the dependencies are complete

The supported first route is a South African technology service to a UK-established, appropriately authorised lender. The lender retains the customer contract, credit risk and receivables. This avoids requiring the first software release to establish an additional lending or managed-collection business. It remains conditional on the actual contract, production powers and cross-border arrangements matching that design.

Before live checkout, the parties should complete five linked steps:

1. The lender and product owner approve a product and activity schedule covering agreement type, fees, repayment terms, distribution and each customer-facing function. Verify the exact lender entity, permissions, restrictions and any transitional status.
2. The lender and supplier execute a service agreement reserving credit commitments, receivable rights, servicing decisions and customer redress to the authorised operation. Give the lender control over model changes, audit evidence, suspension and exit.
3. The lender and merchants agree promotion approval, delivery evidence, returns, refunds, section 75 claims and recovery between the businesses. Publish only the approved customer screens and communications.
4. The privacy and South African compliance owners complete the processing and transfer instruments, territorial credit assessment, applicable reporting preparation and Authorised Dealer requirements. Clear each dependency before the affected data access, licence or payment begins.
5. The lender's accountable owner approves evidence from tests covering an unaffordable application, repeated borrowing, a failed payment, a return, merchant failure, a disputed debt and a complaint. Confirm that supplier staff cannot independently originate, collect or change the debt.

Own lending remains a separate launch decision. It can proceed only after the chosen authorisation or exemption is effective and the operating model can discharge the lender's duties. Adding receivable purchases, autonomous collections, new customer charges or payment powers must trigger a fresh assessment before deployment. (FSMA 2000, ss 19 and 39; RAO, arts 39F–39G and 60B–60J.)

Assess the BNPL permission boundary. Ask Licentium to review the proposed credit and software roles, customer terms, merchant agreement and funds and data flows, and identify the permissions, contract changes and launch dependencies they require.