Germany to implement credit checks for deferred and installment payments

New regulations in Germany, effective November 20, will introduce credit checks for certain online shopping payment methods. The measures specifically target “buy now, pay later” (Später bezahlen) options and installment plans that were previously exempt from strict credit regulations.

Under the new rules, interest-free financing, short-term payment deferrals, and loans under 200 euros will be classified as consumer credit. This change aims to ensure that consumers have the capacity to repay these debts. A payment method will be categorized as credit if it involves the provider paying the purchase amount on behalf of the customer, includes additional costs like interest or fees, or offers extended payment terms beyond standard invoicing.

Traditional shopping models, such as those where a seller offers short-term, interest-free invoicing or where credit cards allow for full monthly interest-free repayment, will remain outside these new requirements. Additionally, the regulation will impact Dispokredit, the practice of allowing bank accounts to enter negative balances.