No, all credit agreements should have the same protections for the consumer. Any credit agreement that has the potential for interest to be applied at some point should be subject to the same rules as credit that is interest bearing from the outset.

The report from the Central Bank of Ireland in November 2023 pointed to issues with lack of understanding:

The Central Bank released research (PDF 741.04KB)that shows many consumers are not aware of the risks of using Buy Now, Pay Later to pay for goods and services. 22% of consumers do not have a full understanding of how Buy Now, Pay Later works, and 36% think that Buy Now, Pay Later is a method of payment rather than a form of credit. The findings also show that when consumers make a purchase they tend to be focused more on the monthly payment amount rather than the total amount borrowed.

There is evidence from the UK that interest free credit agreements are not fully understood leading to issues with borrowers

June 2023: https://maps.org.uk/en/publications/research/2023/buy-now-pay-later-a-review-of-the-market-risks-and-trends-consumer-understanding-impact-and-outcomes#

Key finding: Lack of understanding of BNPL products and limited transparency in individuals’ credit profiles could pose a risk to individuals’ financial wellbeing and the wider economy.

We have considered the cost savings and administrative savings that would accrue to exempt these amounts as there is a cost to extend the scope below €200. However, we would see it more holistically that the Department should quickly implement recommendation 11.2 of the Retail Banking Review from November 2022,

“11.2 The operation of the Central Credit Register should be amended, following engagement with relevant stakeholders, to:

Reduce the reporting threshold for credit agreements from €500 to €200 and the consultation obligation threshold from €2,000 to €1,000; and

Introduce a new lower fee for Central Credit Register consultations for low value loans (i.e., loans of less than €1,000, in line with the proposed changes to the obligatory consultation threshold) to facilitate smaller loans, particularly by credit unions.

The Department of Finance should draft legislation, if the proposed amendments require it.”

The Personal Micro Credit (PMC) initiative and It Makes Sense (IMS) have operated in Credit Unions since a pilot in 2015 and a national rollout in 2016. It is a small loan product (€100 - €2,000) offered through credit unions to social welfare recipients who cannot avail of a standard loan. To note in 2023, 46% of the number of loans written by credit unions were for less than €2,000. Credit unions have a valuable role to play in providing small loans which allow people to avoid high-cost credit.

Consumer Credit Directive - CCD2 - Submissions

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