What happens if you miss a BNPL payment in the UAE

If you miss a buy now, pay later (BNPL) payment in the UAE, the provider can charge the late fee in your contract, but providers under the Central Bank’s Short-Term Credit rules must keep all fees within 30% of the original amount. The contract’s status is reported to the Etihad Credit Bureau (AECB), collection must follow Central Bank rules, and an unpaid debt can be taken to court.

Key takeaways

• For providers covered by the Central Bank's Short-Term Credit rules, all fees on a plan, late fees included, are capped at 30% of the original amount, and no interest may be charged.
• Those providers must spell out their late fees and the consequences of late payment, and disclose the hardship help available to borrowers in difficulty.
• BNPL contracts and their status appear on your AECB credit report, but under the bureau's current model they do not change your score.
• Collection must follow the Central Bank's consumer protection rules: calls and visits only between 9 AM and 8 PM, and no home or work visits without your consent or a court order.
• A travel ban for debt comes from a court order that the creditor must apply for, and in Abu Dhabi it lapses if the creditor does not follow it up in time.

For how BNPL plans work, see how buy now, pay later works; for the rest of the topic, our Buy now, pay later guides.

What happens after a missed BNPL payment

A missed instalment can lead to four things: a late fee, contact under the provider’s collection policy, a status on your credit report and, if the debt stays unpaid, a court claim. Your contract and the collection policy set out the details.

The Finance Companies Regulation rules in this guide bind restricted licence finance companies and agents, the providers covered by the Central Bank’s Short-Term Credit rules (see who can offer BNPL). We have not found a Central Bank rule that applies these caps to a bank’s own instalment plan, such as one on a credit card (see when a bank offers the instalments).

Late fees: what a provider may charge

A provider can charge the late fee set out in your contract. If it is covered by the Short-Term Credit rules, all its fees on a plan, late fees included, must stay within 30% of the original amount, and it may not charge interest.

The 30% ceiling

The ceiling covers every fee on the plan together, not each late fee separately. It still holds if the plan is restructured, rescheduled or rolled over: the most a provider covered by the Short-Term Credit rules can recover is 130% of the original credit. The Central Bank says it will review the percentage at regular intervals.

Ceiling on all BNPL fees, late fees included

30%

Total fees on a Short-Term Credit, including late payment fees, must not exceed 30% of the original amount, so a borrower never repays more than 130% of the credit, even if it is restructured or rolled over.

These providers also must not charge interest, and repayment, including any restructuring or rescheduling, must end within 12 months of the original agreement.

Longest a BNPL plan can run

12 months

Short-Term Credit from a Restricted Licence Finance Company or agent must be repaid within 12 months of the original agreement, including any restructuring, rescheduling or roll-over.

Worked example

AED 1,500 purchase in 4 instalments, one instalment missed

The purchase and the plan are illustrations. The provider is covered by the Short-Term Credit rules and gives credit for the full AED 1,500 price.

1. Instalments: AED 1,500 ÷ 4 = AED 375 each. The first is paid and the second missed, so AED 1,500 less AED 375 = AED 1,125 is unpaid.
2. Fee ceiling for the whole plan, the late fee included: 30% × AED 1,500 = AED 450.
3. Most the provider can recover in total: AED 1,500 + AED 450 = AED 1,950, which is 130% of the purchase.
4. Most it can still recover after the first payment: AED 1,125 unpaid + at most AED 450 in fees = AED 1,575.
5. A rescheduled plan must still end within 12 months of the original agreement, under the same AED 1,950 ceiling.

However the plan is rescheduled, the provider cannot recover more than AED 1,950 in total; the actual late fee is whatever your contract states within that ceiling.

What the provider must tell you up front

A provider covered by the Short-Term Credit rules must spell out its late fees, show with examples how they are calculated, and explain the consequences of late payment and what it does on default.

Late payment information you must get

Disclosed up front

BNPL providers covered by the Short-Term Credit rules must tell borrowers the consequences of late payment, spell out any late payment fees, which must be reasonable, disclose total fees as an amount and as a percentage of the credit with examples of how late fees are calculated, and explain the actions taken in the event of default.

In your contract and the app, look for:

• the total fees in AED and as a percentage of the credit, with examples of how late fees are calculated;
• the consequences of late payment, and a late fee that is stated explicitly and reasonable;
• the actions the provider takes if you default.

For a particular app’s late fee, the figure that binds you is the one in your own contract; this guide quotes no provider’s fees.

Can the provider demand the whole balance?

Not under the rule as written: a provider covered by the Short-Term Credit rules must honour the original term and must not demand full payment before the end of the term agreed in your contract. The regulation does not say whether this still applies after a default, so check what your contract says happens on default.

The provider also must not use your assets, movable or immovable, to secure the plan, fully or partly, so a BNPL plan has no collateral behind it. A court judgment is a different matter: its enforcement can reach bank accounts or property, as explained below.

Your credit report and score

A missed BNPL payment can show on your credit report, but under the bureau’s current model it does not change your credit score.

Providers covered by the Short-Term Credit rules must report borrowers’ credit information to the Etihad Credit Bureau and explain what late payment and default mean for your report. The bureau says the report can show your BNPL contracts, active and closed, the outstanding balance, each contract’s status and the remaining instalments.

BNPL and your credit score

Not in score

Under the current credit score model, buy now, pay later (BNPL) reporting does not affect the credit score, but BNPL contracts appear on the credit report and may be considered by lenders who review it.

Lenders and others who review your report can see the status and may take it into account. Under the bureau’s general rule, defaults and missed payments stay on a report for up to 5 years, even after you settle; its BNPL answers set no different period. For what is reported and how to fix errors, see how BNPL shows on your credit report; to check your own, see how to read your AECB credit report.

Collection calls and visits: what is allowed

Collectors must follow the provider’s collection policy, and that policy must meet the Central Bank’s consumer protection rules: calls and visits only between 9 AM and 8 PM, no excessive calls, and no visits to your home or workplace without your consent or a court order.

A provider covered by the Short-Term Credit rules needs a collection policy that sets out what it does when borrowers pay late, is explained to you and meets the collection requirements of the Central Bank’s Consumer Protection Regulation and Standards. Those Standards say:

When collectors may contact you

9 AM to 8 PM

Lenders and their collection agents may phone or visit a consumer about arrears only between 9 AM and 8 PM.

• Calls. Not excessive, and only between 9 AM and 8 PM. If you are not reached, a message should be left so you can call back the same number.
• Identification. Each contact names the institution and its collection department or agent, a contact number and working hours, and callers give their own name.
• Visits. None to your home or workplace without your express consent or a court order, and none outside 9 AM to 8 PM.
• Privacy. No disclosure of your information to third parties other than the credit bureau or an authorised debt collection agent, unless the law requires it or you consent.

The Standards are written for licensed financial institutions, and the regulation does not say whether every clause binds an agent with no licence of its own. If collectors overstep, note the dates, times and numbers, and complain to the provider and, for an agent, to the licensed bank or finance company it works for. The rules for bank loans and cards are in missed loan and card payments and your consumer protection rights.

Can a BNPL provider file a case or put a travel ban on you?

A BNPL provider can take an unpaid debt to court like any other creditor. It cannot put a travel ban on you by itself: in a debt case, a travel ban is a court order that the creditor has to apply for.

The Abu Dhabi Judicial Department describes the route below; procedures and fees in other courts can differ.

1. Before or with a claim. A creditor can ask the judge for a travel ban as an urgent interim order, and you can object to the order.
2. The creditor must follow it up. A ban over a debt lapses automatically if the creditor does not show the judge a filed claim for the debt within 8 days, or does not start enforcing a final judgment within 30 days of it becoming final.
3. After a judgment. The creditor opens an enforcement file, which can include requests to seize bank accounts or property, to deduct from your salary or to ban you from travelling. You can ask the enforcement judge for instalments or a postponement, with supporting evidence.

When a debt travel ban lapses (Abu Dhabi)

8 / 30 days

A travel ban obtained over a debt lapses automatically if the creditor does not show the judge a filed claim for the debt within 8 days of the order, or does not start enforcing the final judgment within 30 days of it becoming final.

The UAE Government portal says you may have a travel ban if you have a pending legal case. To check, it points to the Dubai Police app, smart police stations and the Public Prosecution’s case enquiry, and for help, to a lawyer or the nearest immigration office or police station.

The conditions a creditor must meet and how a ban is lifted are in travel bans for debt; for moving abroad with debts, see leaving the UAE with debt.

If you cannot pay: your options

Contact the provider before the next instalment is due. Providers covered by the Short-Term Credit rules must disclose the hardship help they offer to borrowers in financial difficulty, including debt management solutions and their forbearance policy.

Hardship help the provider must disclose

Hardship policy disclosed

BNPL providers covered by the Short-Term Credit rules must clearly disclose the hardship assistance available to borrowers in financial difficulty, including suitable debt management solutions and their forbearance policy.

1. Read the policies, then write. Find the hardship, forbearance and collection sections in your contract or the app. Then write to the provider through the app or its official email, say what has changed and what you can pay, and keep copies.
2. Get any new plan in writing. Check that the new schedule ends within 12 months of the original agreement and that total fees stay within 30% of the original amount.
3. List every plan. Note each app, the instalments left and the due dates (see plans across several apps). If you also repay bank loans or cards, the debt burden ratio calculator shows how much of your monthly income those repayments take.
4. Use the complaints route. The provider must handle complaints in a timely and fair manner, and its agreement must describe how. To go further, see how to complain and use Sanadak, and ask Sanadak whether it can take a complaint about your provider.