From Guardrails to Growth

This week: New York jumps in where the feds stepped back, cracking down on BNPL with new rules. Merchants are turning up the heat on PSPs to boost conversions with one-click, card-on-file, and biometrics. Virtual cards are having a moment — and Coinbase hits the big leagues as it joins the S&P 500.

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your weekly dose of payments notes.

New York Steps Up BNPL Oversight

While the federal government has pulled back from regulating buy now, pay later (BNPL) lenders, New York is stepping in. Governor Kathy Hochul has signed legislation that establishes a licensing and supervision framework for BNPL providers operating in the state. The measure was included in New York’s fiscal year 2026 budget.

BNPL’s popularity continues to rise. A Bankrate survey found that 3 in 10 U.S. adults have used a BNPL product — a number consistent across income brackets, with 31% usage among both the highest and lowest earners. For most, it’s a cash flow tool: 57% use BNPL to spread out expenses. But not without risk. A Credit Karma survey found that 34% of BNPL users have made at least one late payment.

Last year, the Consumer Financial Protection Bureau (CFPB) issued an interpretive ruling requiring BNPL firms to follow the same consumer protection rules as credit card companies — including Regulation Z, which mandates disclosures and dispute rights. However, the CFPB reversed course on May 6, stating it would not prioritize enforcement in this area. The Bureau added it may rescind the ruling altogether.

Governor Hochul’s office stated that BNPL loans pose “risks to consumers, including overextension, inconsistent credit reporting, data exploitation, and excessive fees.” To address this, the new law outlines key consumer safeguards:

• Disclosure requirements

• Dispute resolution standards

• Limits on charges and fees

• Data privacy protections

Merchants Want More from PSPs

eCommerce merchants are pushing their payment service providers (PSPs) for more than just reliable processing — they want help boosting conversions. According to a new report from PYMNTS, 44% of merchants say faster conversion is their top priority, with another 28% ranking it as important.

Nearly 70% of U.S. merchants have faced checkout-related UX challenges — particularly cart abandonment and slow checkout times. As a result, more than 75% of merchants have requested new PSP features focused on improving conversion.

The most-requested technologies?

• One-click checkout (45%)

• Secure card-on-file storage (27%)

• Biometric authentication (25%)

• Gateway tokens (22%)

• Network tokens (20%)

The report suggests that PSPs have an opportunity to shift from being just processors to true strategic partners. While merchants rate them well for basic services, many still see them as a utility rather than a value-adding resource.

Virtual Cards Are Gaining Ground

Consumers are warming up to virtual cards — especially when the value proposition is clear. According to PYMNTS, 40% of surveyed consumers said they’ve used a virtual card in the last six months, and 65% expect to use one within the next year.

Top use cases include:

• Temporary card numbers for online shopping

• Auto-pay for recurring transactions

• Single-use (one-time) cards

• Merchant-specific virtual cards

Unsurprisingly, tech-savvy users are leading adoption. Over half of those who use mobile banking or financial apps daily are already using virtual cards. Education, PYMNTS says, will be critical in driving broader usage — as detailed in its report Digital Payments Evolution: Virtual Cards Poised to Take Off.

Coinbase to Join S&P 500

Coinbase is set to become the first cryptocurrency company included in the S&P 500, replacing Discover following its acquisition by Capital One.

It’s a milestone for the broader crypto sector, which has increasingly become part of the mainstream financial ecosystem. Coinbase went public in 2021 and is currently trading around $257 per share.

Adding to the momentum: Bitcoin recently topped $100,000 — a far cry from the days when it traded for under $100. (And yes, I once sold one for $1,200 and thought I was a genius. Ha!)

That’s all for Today in Payments. Stay tuned for your weekly dose of payments notes.