Oregon Proposes Guidance Requiring Nonbank BNPL Providers And Service Providers To Obtain State Lending Licenses

The Oregon Department of Consumer and Business Services, Division of Financial Regulation (DFR), has proposed to issue Bulletin No. DFR 2026-X, reminding nonbank “Buy Now, Pay Later” (BNPL) companies and BNPL service providers that they generally must obtain Oregon lending licenses before offering BNPL products to Oregon consumers. Unlike a few other states, Oregon has not enacted a statute that specifically applies to BNPL companies and service providers. The Bulletin is generally consistent with prior informal advice received from the DFR.

The Bulletin is noteworthy because it rejects several arguments that BNPL providers have advanced in other jurisdictions regarding the applicability of state lending laws. According to the DFR, licensing obligations apply regardless of whether the BNPL product is described as a nonrecourse loan or does not impose interest, fees, or other charges at the time of the initial purchase.

Oregon distinguishes between two licensing regimes

The Bulletin explains that the applicable licensing requirement depends primarily on the repayment term of the BNPL product.

Payday lender license. BNPL loans of $50,000 or less with repayment terms of 60 days or less, or loans payable on demand within 60 days, are subject to Oregon’s Payday Loan Law (ORS Chapter 725A).

Consumer finance lender license. BNPL loans or lines of credit with periodic payments extending beyond 60 days are subject to Oregon’s Consumer Finance Act (ORS Chapter 725).

In both cases, the licensing requirement extends beyond the lender itself to include persons acting as agents, brokers, or facilitators.

DFR concludes that BNPL products are “loans”

Because Oregon’s lending statutes do not define the term “loan,” the DFR looks to dictionary definitions and Oregon case law. Relying on those authorities, the Bulletin concludes that a loan is simply an advance of money accompanied by an obligation to repay in the future.

The DFR observes that BNPL products allow consumers to obtain goods immediately while repaying the obligation over time through scheduled installments. As a result, the agency concludes that BNPL transactions fall within the ordinary meaning of a loan under Oregon law.

The Bulletin discusses the now-common “Pay in Four” product, under which consumers typically pay 25% of the purchase price upfront followed by three equal payments every two weeks. Although these products frequently do not charge interest, the DFR notes that they often include late fees, require automatic payments, may report delinquencies to consumer reporting agencies, and may result in collection activity if consumers default.

“Nonrecourse” characterization does not avoid licensing

One of the more significant aspects of the Bulletin is the DFR’s rejection of the argument that describing a BNPL transaction as “nonrecourse” removes it from Oregon’s licensing statutes.

The DFR explains that a traditional nonrecourse loan generally involves collateral, such as a home or automobile, that the lender may repossess instead of pursuing the borrower personally. In contrast, BNPL transactions financing ordinary retail purchases do not fit within that traditional concept.

Accordingly, labeling a BNPL product as “nonrecourse” does not eliminate the licensing requirements imposed by either Oregon’s payday lending or consumer finance statutes.

Merchant-funded BNPL programs also require licensing

The Bulletin also addresses licensing exemptions contained in Oregon’s Consumer Finance Act.

The DFR concludes that nonbank BNPL providers generally are not eligible for those exemptions where a retailer pays the BNPL provider to offer financing to the retailer’s customers. According to the Bulletin, the retailer’s payment constitutes consideration supporting the consumer finance loan, thereby disqualifying the provider from relying on the statutory exemption.

This interpretation is significant because many BNPL business models depend on merchant discount fees rather than consumer-paid finance charges.

Service providers may also need licenses

Another important feature of the Bulletin is its broad interpretation of who must be licensed.

The DFR emphasizes that Oregon’s licensing statutes apply not only to lenders but also to agents, brokers and facilitators. The Bulletin points to statutory definitions encompassing entities that process applications, transmit payments, or materially assist in making consumer finance loans. With respect to servicing activity, the Bulletin appears to conflict with long-standing guidance that such activity does not require a license.

Consequently, technology companies, payment processors, platform providers, and other participants supporting BNPL programs should carefully evaluate whether their activities require Oregon licensure.

Practical implications

The Oregon Bulletin reflects the continuing trend among state regulators to treat BNPL products as traditional consumer credit products rather than as novel payment arrangements falling outside existing lending laws.

Companies offering BNPL products nationwide should carefully review Oregon’s guidance and evaluate whether their existing licensing strategies adequately address the state’s interpretation of its lending statutes. In particular, companies should determine:

• whether repayment terms trigger Oregon’s payday lending or consumer finance licensing requirements;
• whether affiliates or service providers could be considered agents, brokers, or facilitators;
• whether merchant-funded business models affect eligibility for licensing exemptions; and
• whether existing Oregon operations should be licensed through the Nationwide Multistate Licensing System (NMLS).

Status of Proposal

The public comment period closed on July 17, 2026. It will be interesting to see whether the DFR modifies its analysis in response to comments submitted by industry participants before issuing a final Bulletin. Given the significance of the issues raised and the potentially broad impact on BNPL providers and service providers, changes to the final Bulletin would not be surprising.

Our observations

While the bulletin is comprehensive, it raises several legal and policy questions.

First, the DFR appears to be attempting to fit a square peg into a round hole. For a detailed explanation as to why that is true, see the comment letter submitted by the American Fintech Council to DFR. Oregon’s payday lending and consumer finance statutes were enacted long before the emergence of modern BNPL products. Those statutes were designed to regulate traditional short-term cash advances and installment loans, not merchant point-of-sale financing products that often charge no interest and derive their revenue primarily from merchant fees. Rather than asking whether the Oregon Legislature intended either statutory framework to encompass BNPL products, the Bulletin reasons that because BNPL involves an advance of money with an obligation to repay, it necessarily must fit within one of the two existing licensing statutes. That conclusion is hardly self-evident.

Second, the Bulletin relies heavily on dictionary definitions of terms such as “loan,” “agent,” and “purchase money loan.” Resorting to dictionary definitions is an accepted tool of statutory construction where a statute does not define a term. However, courts generally do not stop there. They also consider statutory context, legislative purpose, legislative history, related statutory provisions, and the practical consequences of competing interpretations. The Bulletin gives comparatively little attention to those considerations.

Third, the DFR largely dismisses the significant economic differences between traditional payday lending and BNPL products. Payday loans typically involve the extension of cash, carry extremely high annual percentage rates, and are frequently associated with repeat borrowing. By contrast, the most common Pay-in-Four BNPL products finance a single retail purchase, generally do not charge interest, amortize automatically over four payments, and are funded economically through merchant discount fees rather than consumer finance charges. Those differences have prompted several legislatures to enact BNPL-specific legislation rather than attempting to shoehorn BNPL into existing lending statutes.

Fourth, the Bulletin explains why characterizing a BNPL product as “nonrecourse” does not eliminate licensing obligations, but it does so by mischaracterizing how that term is used with BNPL products. BNPL products are typically unsecured. A nonrecourse BNPL product is one where the buyer has no legal obligation to repay the creditor. It can also be one where the creditor cannot recover from the merchant either. It is not one where the creditor can repossess collateral following a payment default. While the buyer may feel a moral obligation to repay, the DFR fails to explain why that moral obligation to repay, in and of itself, should trigger licensing.

Fifth, the Bulletin concludes that merchant payments to BNPL providers constitute “consideration” that precludes reliance on certain statutory licensing exemptions. Although that interpretation is plausible, the Bulletin offers little analysis beyond the bare assertion that merchant compensation constitutes consideration. Given the widespread use of merchant-funded payment models throughout the payments ecosystem, a more robust statutory analysis would have been helpful.

Sixth, the DFR’s interpretation of “purchase money loan” is open to question. The Bulletin relies principally on a dictionary definition stating that a purchase money loan is secured by the property purchased. Many commercial lawyers, however, would understand purchase-money financing more broadly as financing used to acquire specific goods, whether or not the creditor ultimately retains a security interest. The Bulletin does not engage with those broader commercial law concepts.

Seventh, the Bulletin adopts an expansive interpretation of “agent,” “broker,” and “facilitator” that could require licensing not only of lenders but also of technology companies, payment processors, platform providers, and other service providers that materially assist in BNPL programs. That interpretation could significantly expand the scope of Oregon’s licensing laws beyond what many market participants have historically understood.

Finally, the Bulletin arguably goes beyond merely interpreting existing statutes and instead establishes what amounts to a comprehensive regulatory framework for BNPL products. It specifies which BNPL products require licenses, interprets statutory exemptions narrowly, expands the categories of entities requiring licensure, and addresses the legal significance of merchant-funded and nonrecourse structures. Critics are therefore likely to argue that these are policy determinations more appropriately made by the Oregon Legislature or through formal rulemaking rather than through interpretive guidance.

The Oregon Bulletin illustrates the growing tension between decades-old consumer lending statutes and rapidly evolving payment technologies. Rather than asking the Legislature to enact BNPL-specific legislation—as a number of states have done—the Division has attempted to fit BNPL products into existing payday lending and consumer finance statutes through an expansive interpretation of terms such as “loan,” “agent,” and “purchase money loan.” Whether courts ultimately agree with that approach remains to be seen. Although agencies are entitled to interpret ambiguous statutes, there is a meaningful difference between interpreting existing law and effectively creating a new regulatory regime for an innovative financial product. Critics are likely to argue that the Bulletin crosses that line by stretching statutes enacted long before BNPL existed to reach products that differ in important economic and operational respects from the payday and installment loans those statutes were originally designed to regulate. Such policy choices, they may contend, are better left to the Oregon Legislature than accomplished through administrative guidance.