--- name: prompt-pack-bnpl-platform-agreement description: Use when drafting a buy-now-pay-later (BNPL) platform agreement between a BNPL provider and a merchant, covering integration requirements, payment terms, merchant fees, customer credit assessment, default handling, returns and refunds, and consumer credit regulation compliance. FinTech/payments practice area with MENA-specific attention to consumer credit licensing (UAE, KSA, EG) and Sharia-compliant BNPL structures. license: MIT metadata: id: prompt-pack.bnpl-platform-agreement category: prompt-pack practice_area: fintech-payments priority: P2 intent: [drafting, bnpl-platform-agreement] related: [prompt-pack-aml-kyc-policy, prompt-pack-anti-money-laundering-policy, heuristic-always-state-jurisdiction-first, kb-fintech-regulation-mena, prompt-pack-agreement-legal-draft-review] source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal) version: "1.0" --- # BNPL Platform Agreement ## When to use this Use this skill when a BNPL (buy-now-pay-later) provider needs a **platform agreement** with a merchant who will offer BNPL as a payment option to that merchant's customers. The BNPL provider takes on the credit risk of the customer; the merchant receives payment (net of fees) from the BNPL provider. This agreement defines the commercial and legal relationship between the BNPL provider and the merchant. A separate (B2C) agreement governs the relationship between the BNPL provider and the end customer — that is not this document. Relevant for: - BNPL fintechs expanding their merchant network in MENA - E-commerce platforms seeking BNPL partnerships - Banks and licensed lenders offering BNPL as a product - Merchants assessing BNPL provider terms --- ## Prompt template > Draft a buy-now-pay-later platform agreement between [BNPL Provider] and [Merchant]. Include integration requirements, payment terms, merchant fees, customer credit assessment, default handling, returns/refunds, and consumer credit regulation compliance. Use [[conversation-clarifying-questions]] to elicit `[bracketed]` inputs before drafting. --- ## Required inputs | Input | Why it matters | |-------|---------------| | BNPL provider name, licensing status, and jurisdiction | Determines regulatory framework and what the provider is licensed to do | | Merchant name, business type, and jurisdiction | Consumer-facing retail vs. B2B affects BNPL regulatory treatment | | Jurisdictions where customers will use BNPL | Consumer credit regulation applies in the customer's jurisdiction | | Fee structure | Merchant discount rate; late payment fees; setup fees | | BNPL product parameters | Number of installments; interest-free vs. interest-bearing; maximum transaction amount | --- ## Document structure ### 1. Parties and recitals - Full legal names and jurisdictions; licensing/regulatory status of the BNPL provider - Recital: the BNPL provider is licensed to provide deferred payment or credit services; the merchant wishes to offer this service to its customers ### 2. Definitions Key defined terms for BNPL agreements: - **BNPL Transaction**: a customer purchase where the BNPL provider finances the purchase price - **Settlement Amount**: the amount the BNPL provider pays the Merchant (typically purchase price minus Merchant Discount Rate) - **Merchant Discount Rate (MDR)**: the fee the merchant pays to the BNPL provider, expressed as a percentage of the transaction value - **Instalment Plan**: the customer's repayment schedule - **Chargeback**: a disputed transaction reversed by the BNPL provider - **Eligible Purchase**: transactions that qualify for BNPL (above/below certain values; not certain product categories) ### 3. BNPL service #### 3.1 Service description - The BNPL provider will offer an instalment payment option at the merchant's checkout (online and/or in-store) - The provider will assess the customer's creditworthiness and approve or decline the BNPL application - On approval, the provider pays the merchant the Settlement Amount; the customer repays the provider over the agreed instalment schedule #### 3.2 Customer credit assessment The merchant must understand (and the agreement must state): - Credit assessment is entirely the BNPL provider's responsibility; the merchant has no input into individual credit decisions - The provider may decline any transaction at its discretion; the merchant has no claim for a declined transaction - The merchant must not imply that BNPL approval is guaranteed - The provider's credit assessment methodology, data sources, and criteria are proprietary — the agreement does not require disclosure to the merchant #### 3.3 Customer terms - The customer's instalment agreement is between the customer and the BNPL provider only - The merchant is not a party to the customer's instalment obligation - The merchant is paid whether or not the customer repays the provider (the provider takes the credit risk — this is the merchant value proposition) ### 4. Merchant obligations #### 4.1 Integration - Technical integration via API or embedded widget as specified in the technical specification (Schedule A) - Merchant must not modify the BNPL payment flow without provider approval - Merchant must display BNPL option clearly and in accordance with the provider's branding guidelines - Merchant must not represent BNPL terms to customers other than those approved by the provider #### 4.2 Eligible purchases - Minimum and maximum transaction amounts - Excluded categories (typically: gambling, adult content, weapons, cryptocurrency, financial products — list specifically) - Geographic restrictions: BNPL is only available to customers in specified territories #### 4.3 Customer information - Merchant must provide accurate transaction information to the provider at the time of BNPL application - Merchant must not encourage customers to apply for BNPL with false information #### 4.4 Compliance obligations - Merchant must comply with all applicable law in the jurisdictions where it operates - Merchant must not offer BNPL in jurisdictions where the provider is not licensed ### 5. Payment terms — Merchant Settlement #### 5.1 Settlement process - The provider will settle the Settlement Amount to the merchant within [X] business days of the BNPL transaction being approved and goods/services delivered/provided - Settlement is net of the Merchant Discount Rate - Settlement schedule: daily, weekly, or per batch (specify) #### 5.2 Merchant Discount Rate (MDR) - Define the MDR (e.g., 2.5% of transaction value) - Whether MDR varies by product category, transaction size, or jurisdiction - Right to adjust MDR: notice period; merchant's right to terminate if new MDR is not acceptable #### 5.3 Currency and withholding - Settlement currency - Cross-border payments: withholding tax obligations; gross-up clause (or not) ### 6. Default handling and chargebacks #### 6.1 Customer default - When a customer fails to repay the provider, this has **no effect on the merchant** — the merchant has already been paid (net of MDR). The credit risk is the provider's. - Exception: if the transaction was fraudulent and the merchant was involved, the provider may claw back the settlement (see fraud provisions) #### 6.2 Merchant chargebacks A chargeback is a transaction the provider reverses against the merchant, typically because: - The customer disputed the transaction (non-delivery, wrong item, fraud) - The transaction was unauthorized or involved merchant fraud Chargeback process: - Provider notifies merchant of chargeback - Merchant has [X] days to dispute with supporting evidence (proof of delivery, authorization records) - Provider makes final determination - Chargeback amount is set off against future settlements or charged back to merchant **Chargeback liability rules**: merchant is liable for chargebacks resulting from merchant fraud or non-delivery; merchant is not liable for customer credit defaults. ### 7. Returns and refunds - When a customer returns goods and is entitled to a refund, the merchant must notify the provider within [X] business days - Provider reverses the instalment plan and issues a refund to the customer - Merchant reimburses the provider the Settlement Amount (but not the MDR) within [X] days - Partial refunds: provider adjusts the instalment plan; recalculates remaining instalments ### 8. Consumer credit regulation compliance **This is the most legally significant section in the MENA context.** BNPL straddles the boundary between payment services and consumer credit regulation: | Jurisdiction | BNPL regulatory status | |-------------|----------------------| | UAE (CBUAE) | CBUAE Financial Consumer Protection Regulation applies; BNPL products may require a personal finance licence; CBUAE has issued specific guidance on BNPL (2023–2024 fintech framework). Interest-free BNPL may be structured as deferred payment rather than credit to avoid consumer credit licensing | | UAE (DIFC / DFSA) | DFSA Consumer Credit Module applies; BNPL must comply with Conduct of Business rules | | KSA (SAMA) | SAMA Personal Finance Regulations apply if BNPL involves finance charges; Sharia-compliance required; interest-bearing BNPL requires Islamic finance structure (murabaha or tawarruq) | | Egypt (CBE) | Consumer finance regulation; BNPL providers must be licensed by the CBE or the Financial Regulatory Authority (FRA) | | EU | Consumer Credit Directive (2023 EU CCD) explicitly covers BNPL; full credit assessment requirements; right of withdrawal; APR disclosure | | UK | FCA regulation; BNPL included in Buy-Now-Pay-Later regulation (Financial Services and Markets Act amendments) | **Sharia-compliant BNPL note**: in KSA and UAE Islamic markets, BNPL is often structured as a murabaha (cost-plus sale) rather than a loan — the provider purchases the goods and sells them to the customer at a profit margin, with deferred payment. The platform agreement should reflect the structure used. Compliance obligations in the agreement: - BNPL provider must maintain required licences - Agreement must permit the merchant to comply with applicable consumer protection law - Merchant must not misrepresent BNPL terms to customers - Both parties must cooperate with regulatory enquiries ### 9. Data and privacy - Customer personal data is processed by the BNPL provider (the credit assessment process) - Merchant receives transaction status but not the customer's credit information - Data processing agreement (DPA) should be embedded or attached — required under UAE PDPL, DIFC Data Protection Law, GDPR - Data minimization: merchant should only receive the minimum customer information needed for its records ### 10. Intellectual property - The BNPL provider licenses its branding, logo, and checkout widget to the merchant for use in the BNPL presentation - Merchant may not modify the materials - License terminates on termination of the agreement ### 11. Term, suspension, and termination - Term: typically 12–24 months; auto-renews unless notice given - Suspension: provider may suspend merchant from the BNPL platform for fraud suspicion, high chargeback rate, compliance breach — with immediate effect in serious cases - Termination: by either party on [60/90] days' notice; for cause (material breach, insolvency, licence revocation) on [5/10] days' notice or immediately - Effect of termination: transactions already processed continue per their instalment schedule; no new BNPL transactions after termination ### 12. Liability and indemnity - BNPL provider's liability cap: typically the settlement amounts paid to the merchant in the preceding [3/6/12] months - Mutual exclusion of consequential damages - Merchant indemnifies provider for: merchant fraud; misrepresentation to customers; non-delivery of goods; breach of the agreement ### 13. Governing law and dispute resolution - Jurisdiction-specific choice (DIFC law + DIFC arbitration for UAE cross-border; English law + ICC for international) - Consider DIAC arbitration for UAE domestic disputes --- ## Jurisdictional notes ### UAE CBUAE has been developing a comprehensive BNPL regulatory framework. Providers must monitor CBUAE guidance actively — the framework is evolving. The critical question is whether the specific BNPL product structure requires a personal finance licence (if it involves finance charges) or falls under payment services (if truly interest-free deferred payment). Get legal advice on structure before launch. ### KSA SAMA has required BNPL providers to operate through licensed finance companies (Tamwil companies) or banks. Pure technology BNPL platforms not directly providing credit must partner with a licensed finance entity. Sharia compliance is mandatory — interest-bearing BNPL cannot operate in KSA. --- ## Common mistakes - Not addressing the precise regulatory characterization of the BNPL product (credit vs. payment service) - Inadequate chargeback procedures (the most common operational dispute in BNPL agreements) - No data processing agreement — required in all major MENA jurisdictions - Merchant liability for customer credit defaults (this reverses the commercial proposition of BNPL for merchants) - No refund mechanism — the settlement economics break down without a clear refund process --- ## Related skills - [[prompt-pack-aml-kyc-policy]] — AML obligations that apply to BNPL providers - [[kb-fintech-regulation-mena]] — MENA fintech licensing and regulatory reference - [[heuristic-always-state-jurisdiction-first]] — consumer credit regulation is strictly jurisdiction-specific - [[prompt-pack-agreement-legal-draft-review]] — reviewing a BNPL agreement presented by a counterparty