Bahrain flags increased oversight of ‘buy now, pay later’ sector

The Central Bank of Bahrain (CBB) closed its consultation in late 2025 and is now reviewing industry feedback on a draft BNPL module, which would be added to volume five of its rulebook governing financing companies. The module would, for the first time, classify BNPL as a regulated short term credit activity, meaning providers would be subject to capital, conduct and operational rules as other financial lenders.

Under the proposed rules, BNPL firms would be subject to regulatory requirements covering consumer protection, disclosure standards, marketing practices, complaints handling and digital security. The measures are intended to close gaps that have allowed BNPL to operate at the fringes of regulation despite its rapid adoption across Bahrain’s retail and fintech markets.

Marie Chowdhry, an expert in fintech at Pinsent Masons, said: “The proposals carry significant implications for BNPL providers, fintech platforms, merchants that partner with instalment payment firms, and banks already offering, or considering offering, BNPL products.”

“Market participants are expected to examine potential licensing needs and assess the impact of new capital and compliance obligations,” she said. 

“The CBB is signalling a shift towards greater alignment between BNPL and mainstream consumer credit rules, narrowing inconsistencies in existing financial regulations.”

The CBB said that the rules are needed to ensure adequate consumer safeguards and to create a “level playing field” between BNPL providers and traditional credit lenders, while formalising BNPL as a regulated form of short-term credit will help bring consistency across consumer finance products.

Lana Akkad, an expert in fintech at Pinsent Masons, said: “The draft module builds on earlier efforts to modernise volume five to reflect emerging digital financing models, including previous amendments that eased capital barriers for BNPL firms entering the market.”

“BNPL schemes have surged in popularity across international and regional markets in recent years, often outpacing regulatory frameworks,” she said.

“The consultation demonstrates the CBB’s intent to keep pace with global developments and to supervise digitising financial services proactively.”

Credit providers should prepare for a future in which BNPL, once viewed as a fintech innovation operating on the margins, becomes a fully regulated component of Bahrain’s credit ecosystem, according to Chowdhry.