But let me sit you down for a cup of coffee and walk you through the secret wars going on behind the scenes of the adoption of this European directive, and how it’s in fact very little about consumers and consumer protection and all about power and politics.

Sure, the official narrative is that it is supposed to finally bring back consumer protection against predatory lending practices and strengthen the consumers against those illegal malpractices trying to get you hooked on debt gamification. It is certainly the politically correct narrative. But given the nature of politics, it’s not in all aspects an honest one. A wise woman once said: if you want to learn the truth, follow the money.

It’s a story of how banks hoped to use consumer protection as a blow to one of their biggest rivals, how the world’s largest BNPL player wanted to play both sides to pull up the ladder against their competitors and how merchants got a win in quotation marks, while another monopolist player sitting on infrastructure is hoping for the big payday. Caveat: this is (mostly) the German perspective on CCD2.

First the boring homework, then you can play games

The EU directive, approved by the European Parliament 12 Sept 2023 and published 30 Oct 2023, gave each member state a deadline until 20 Nov 2025 to transpose this directive into local law, full application exactly one year later, in 2026. Well, here we are now. Without boring you with the details, what this directive effectively brings down is the exemption from credit scope for sub €200 loans, zero-interest credit and short-term (under 3 months) financing. Which is precisely the sweet spot where the majority of Buy Now, Pay Later transactions lie. All transactions, including those previously exempt, now require a credit check. Then there are a few more details around consumers having the right to a one-button “revoke” from their credit agreement (the right to step back isn’t new, only the zero-friction button), and some limitations in advertising all those horrendously dangerous short-term financing options.

Really, that is all to be said about it. It’s nowhere near as world-shattering, as everyone wants you to believe. I can’t speak for the rest of the market, but at any previous company I have worked at, most of the things mentioned above have been good business practice long before anyone came along with the consumer protection flag, because those practices also protect, believe it or not, your bottom line as a BNPL provider. You will eat that payment default for breakfast, lunch and dinner if you ignore them. Which brings me to the “villain origin story of BNPL”, and why it (or more precisely its pink representative) became the boogeyman of the tabloid press.

Debt gamification and its allies

To say that BNPL didn’t deserve a lot of its bad rep is of course also dishonest. So let’s go down the rabbit hole of the Zero-Interest Venture Capitalist (TM) (and some smaller side characters). I didn’t bother to gather receipts for this section, as a) it was brutally obvious and b) your AI-agent can do that for you, if you want to verify my claims. They are all based on working in this industry since 2012.

I remember a time, dear reader, when Klarna would pivot strategy more often than Sebastian Smiatkowski could give interviews on international television. But what all these pivots had in common was obviously one thing: growth at all costs. There is little other choice, when VCs are pumping money into your company at record speed during the era of zero interest. Money was cheap and had to be parked where the next 100x was expected. And in some quiet moments I lie awake at night and wonder, if VCs don’t understand financial services or if they truly believe that everything is a SaaS (I don’t lie awake at night, but wouldn’t that be funny).

Sure, the customer acquisition funnel is an important one, especially when you launch an app with cute icons, and hire Snoop Dogg to dance for you on TV. It is especially important if you, as an ambitious European start-up, push into the big shark tank that is the US-market facing adversaries like Affirm.

But if customer acquisition is your only key metric by which you value growth, while doing BNPL as your core business, you are burning money at record speed on consumer default. And what shows up in your bottom line will eventually show up in tabloid stories about young people sleep-walking into the “Klarna-trap”. Calling the US-market product a “loss-leader” (back in the day) has definitely a cynical aftertaste when you realise you are not giving away some cheap app seats, but literally free money that never gets paid back and ruins the credit of users following your irresistible UX.

Those days are over, also because Klarna went through the typical Fintech-Carcinisation of mutating into a neo-bank to push the product which originally made it big into the level of a feature. Today the stock market values Klarna at a lower valuation than pre-IPO, now that as a public company the debt rolling through its ledger is out in the open. And I digress, but the timing of this is just perfect: barely two months after floating in September 2025 at $40 a share, Klarna posted a 102% year-on-year jump in its provisions for credit losses , the stock slid into the low $30s, and a pile-up of investor class actions followed – alleging the IPO prospectus had quietly understated just how risky the loan book really was, and how many borrowers were already in financial hardship. Or, in the framing of this post: the neo-bank stands accused of selling investors the shiny AI-powered digital bank story while the ledger underneath was allegedly still very much a heap of unsecured consumer BNPL debt. Which all brings back the reality that growth for BNPL can not come at all costs and definitely not at the cost of profitability, which by design protects consumers.

Then there were some rather localised, DACH-specific shenanigans going on. Debt collectors are – as much as they fight it – a rather questionable business, and even more so, if their product portfolio offers BNPL. What do you mean, you as a Debt Collector are offering pay later? Just how late do you mean consumers should pay? Because usually the only pay later transactions that end up on your desk are already defaulted? Are you trying to tell me, you are offering marketplaces BNPL at an immoral discount (since you are not refinancing this debt for the merchant, but only “collecting” at default)? All you do is evaluate the most basic risk checks upfront (effectively just verifying the consumer’s identity) and then gratefully taking all those defaulted transactions from the merchant after 2 months, paying them out the nominal and charging the consumer a royal debt collector’s fee on top? You mean to tell me that BNPL for you is just another debt funnel? It can not possibly be the case!?

Thankfully those wild west debt collection stories are over, at the latest, with CCD2.

‘Tis just a flesh wound!

Now, let’s look at the other side of the coin. Because despite all villain origin stories BNPL is incredibly successful. So successful in fact that it has become a commodity that is almost expected at every point of purchase these days.

And I can tell you which players in the market hate this more than anyone else: banks.

A few receipts on how BNPL has taken away bank business they believed to be untouchable.

The credit card is the banks’ main connector to consumers at the point of payment. In Germany, a notoriously anti credit card country (Germans love their cash), the checkout is the first lost battleground. The EHI Retail Institute has been analysing German online checkouts for years, and the story is pretty unimpressive: credit and international debit cards combined have been stuck in the low double digits – drifting somewhere between roughly 11 and 14% of online revenue depending on the year – while Rechnungskauf (~26%) and PayPal (~28%, with Pay Later baked right in) calmly split the top of the table between them.

Outside of the checkout, it’s a wholesale migration of credit volume. German BNPL payments were on track for around $70bn in 2024, still growing about 14% a year , or roughly €65bn, and pure installment BNPL has doubled its share of the German checkout in three years . Meanwhile, the banks’ own consumer-credit book did the exact opposite: outstanding credit to private households shrank from about €234bn at the end of 2023 to roughly €201bn by late 2025 – so €33bn of lending that quietly evaporated off bank balance sheets. Before you scream about correlation and causation, I know interest rates went up a lot, so we can’t equate that 1:1, but the direction in which consumer credits are travelling is not subtle, whatever you think the cause might be.

It took a dancing Snoop Dogg to make BNPL this big. Get down with it.

Now you might understand why banks all of a sudden woke up one morning and discovered a deep, deep passion for consumer protection. Won’t someone think of the children consumers, please?!

Fingerprints, everywhere!

With the release of the directive, the lobbying war behind the scenes started, and that is truly the exciting bit.

Let’s first look at the banks, and if we can find fingerprints of them influencing legislators to transcribe the directive into German law in their favour. The clearest one is a 30-page statement from the Deutsche Kreditwirtschaft – the joint lobbying arm of every German banking group – filed on the implementation bill on 30 September 2025 (Lobbyregister-Nr. R001459, in case you think I’m making this up). And here’s the twist: the banks are not attacking BNPL outright. They are asking for their own products to be quietly lifted out of the very rules BNPL now has to swallow. Two demands stand out: credit-card payment deferrals should be excluded from scope, and the beloved geduldete Überziehung (tolerated overdraft) should be spared the new creditworthiness check entirely. For good measure they added the “no-gold-plating” hymn in there (gold-plating means you would make the German rules stricter than Brussels requires) and a request to secure the legal basis for pulling credit bureau data on consumers. In plain terms: the banks were fighting to make sure the exact same product, a short-term deferral, stays cheap and frictionless when a bank sells it as a card or an overdraft, but expensive and check-laden when a fintech sells it at the checkout. Talk about asymmetry.

The Bankenfachverband pushed the same “no gold-plating” line. And one floor up, at the European level, the European Banking Federation has been chanting the same deceptively fair-sounding principle for years: the same activities and risks should face the same rules, no matter who provides them. In plain terms: “same rules for everyone” sounds like a plea for fairness, but from the mouth of the incumbent it’s a moat. You force upon the lightly-regulated newcomer bank-grade compliance cost, and the clear winner is the bank who already paid for all of that decades ago.

Now let’s walk over to the other trench, and you find the world’s biggest BNPL player lobbying just as hard, with a very similar strategy, only directed against merchants (!). Klarna filed its own statement on 18 July 2025 , opening with the claim that it is “a long-time advocate of regulation”. What Klarna actually asks for: widen the exemptions for BNPL, keep the affordability checks light and proportionate for small interest-free baskets – and then asks the government to tighten the screws on everyone else. Klarna explicitly backs interest caps and late-fee limits (which happen to sting the smaller players far more than a giant), and instead demands that self-financing deferral models run by big marketplace platforms “should not be able to escape CCD2 protection.” It made the same argument in Brussels : don’t let the big merchants dodge the rules a licensed institution like us has to follow. In plain terms: This is a company that turned into a bank now lobbying like one. Klarna wants its own product handled gently and every competitor, be it the small fintechs or the self-financing marketplaces, dragged into the expensive end of the pool. You can call this move “pull-up-the-ladder.”

And then there’s everyone else who showed up . PayPal wanted digital contracts freed from paper-form requirements and a narrow reading of who counts as a “credit intermediary” (so small shops aren’t swept in). Bitkom, the digital-industry lobby, sang the no-gold-plating song. And the entire retail bloc (including e-commerce association bevh, the retail federation HDE, and big retail names like Otto) fought to protect the classic German Rechnungskauf, the humble pay-by-invoice, and to keep warning labels off interest-free deferrals. Note the little war hidden in here: the merchants want the self-financing exemption kept wide open, which is precisely the loophole Klarna lobbied to slam shut. In plain terms: the merchants were fighting to preserve their in-house offering without a friction-laden credit check scaring you off mid-purchase. Keep pay-by-invoice, keep the conversion rate.

Which leaves us with the quietest player in the room, and – by following the money – possibly the biggest net-winner of them all. Schufa, Germany’s dominant credit bureau, also filed in the consultation, and its ask was at least honest: it supports comprehensive creditworthiness checks, right down to the smallest micro-loan, and it wants firm legal certainty for credit scoring. Colour me surprised. Of course they do, because Schufa is majority-owned by the banking sector (savings and cooperative banks alone hold about 54%) and earns its keep from the credit checks it runs – over 165 million inquiries a year for around €304m in revenue. A law that mandates a credit check on every teeny-tiny BNPL transaction in the country is, for Schufa, simply a firehose of new revenue. And in the very same legislative package, Germany bolted on a new § 37a BDSG – critics call it the “Lex Schufa” – that hands scoring a clean legal basis right after a 2023 EU court ruling had cast doubt on it. In plain terms: Schufa never needed an exemption. It needed the checks to become mandatory and its scoring to become legally bulletproof, and it got both.

Where the eagle has actually landed

So after all that trench warfare, where did the final German law actually come down? Not cleanly on any single lobby’s side, as flagged on the Alles Legal podcast , whose episode on the final law billed it as holding handfeste Überraschungen – some real surprises – in how far it swung away from the draft.

Per Noerr’s read of the passed law :

• Bank credit cards? Carved out – exempt as long as the deferral is interest-free and repaid within 40 days (§ 506 Abs. 1 S. 2 Nr. 4 BGB). Bank win.
• Tolerated overdrafts? Not carved out. Germany had the opt-out sitting right there and declined to use it. Bank loss – the one big thing the Deutsche Kreditwirtschaft asked for and didn’t get.
• The classic merchant invoice? Exempt – interest-free deferral up to 50 days for a small or mid-sized seller, but only 14 days if the merchant is a large enterprise. Merchant win – but a clipped one.
• And the surprise Lörsch keeps circling back to: the trigger that kills the BNPL exemption got rewritten between draft and final. The draft said that assigning the individual claim (a routine factoring move) would drag you into scope; the final law softened it so that only transferring the whole financing relationship to a third party (like Klarna or PayPal) does. In other words, the exemption became more generous to BNPL-style structures at the last minute.

In plain terms: nobody won clean. The banks kept their cards but lost their overdrafts, Klarna failed to widen the scope and failed to close the merchant loophole, and the merchants kept their invoice but watched the big-player version get trimmed to a 14-day payment deferral. There is one real winner, at least on paper.

The real winners of this war

I guess you have almost finished your coffee by now, and we have arrived at the punchline. Everyone fought over the exemption map – which product is in, which is out. But the real money never sat there.

First, compliance cost. CCD2 turns the full affordability check, the pre-contract paperwork (or the digital version of it), and an entire new supervisory regime into the price of admission for doing credit or credit-like products at the checkout. Whoever already owns that machinery shrugs and absorbs it. Whoever doesn’t – the small fintechs, the VC-growth players, smaller merchants – suddenly faces a new fixed cost. Even a banking-friendly consultancy like Oliver Wyman says it out loud: banks are well-positioned to capitalise on CCD2. The “level playing field” everyone so piously demanded is, functionally, a moat for the banks.

Second, the Schufa toll booth. Every one of those newly-mandatory checks is a query, and a huge share of them flows through the bank-owned bureau, whose legal foundation just got reinforced in the same law. Schufa didn’t have to win a single exemption fight. It owns the road everyone else now has to drive down. And of course, the banks – as majority owners of Schufa – are indirectly scraping up credit data that used to bypass them entirely. The only thing keeping this a paper win for now is that every other bureau benefits too – Schufa’s German competition is fierce, with the likes of CRIF and Experian. That is a hidden war for another blog post, maybe.

So who really won? The winners are the two players who barely had to fight: whoever can afford the compliance bill, and whoever collects the toll. The merchants got a headline exemption that mostly helps the ones still carrying their own invoices.

Such is the nature of games for power and politics, there is rarely a clear winner, and somehow everyone loses at the end. Funnily enough – if you have read this far, do you remember what the CCD2 is actually about? Oh yeah, right. The consumer. It is telling that in all this illumination of the behind-the-scenes the consumer is rarely mentioned as the real beneficiary of this whole dance.

One can only hope, once the dust settles, and every “revoke my credit” button sits in place and everyone has had their fill of podcasts and webinars about it, the real beneficiary is and remains the consumer.