Regulations have changed for buy now pay later

Australians who use buy now pay later (BNPL) services now benefit from stronger consumer protections under new laws that took effect on 10 June 2025. These changes bring BNPL services more closely in line with traditional credit products while preserving their flexibility and convenience.

BNPL Services Now Regulated Like Credit Products

BNPL services are now regulated in a similar way to credit cards and other lending products. Previously, BNPL providers operated outside the National Consumer Credit Act, which created gaps in consumer protection. Under the new framework, BNPL providers must comply with formal credit and consumer protection requirements.

All BNPL providers must now:

• Hold an Australian credit licence, or have applied for one by 10 June 2025
• Be a member of the Australian Financial Complaints Authority (AFCA)
• Follow responsible lending obligations
• Meet additional consumer protection standards

These requirements strengthen oversight while allowing BNPL services to continue operating as a popular payment option.

Low Cost Credit Contracts Explained

The new regulatory framework recognises that BNPL services generally pose lower risk than traditional credit products. As a result, most BNPL arrangements fall under the category of low cost credit contracts. This approach applies modified obligations that balance consumer protection with the unique features of BNPL services.

Responsible Lending Obligations Now Apply

BNPL providers must now meet responsible lending requirements when they:

• Enter into a new BNPL contract, or
• Increase a customer’s credit limit

This generally involves collecting and verifying information about a customer’s financial situation and assessing whether the BNPL arrangement is unsuitable. Customers have the right to request a free written copy of the provider’s assessment, and the provider must supply it upon request.

What This Means for Consumers

These regulatory changes aim to:

• Reduce the risk of unsustainable debt
• Improve transparency around BNPL products
• Ensure consumers have access to dispute resolution and fair treatment

While BNPL services remain convenient and widely used, the new rules help prevent debt spirals and ensure consumers receive protections similar to those available for other credit products.

Key Takeaway

The updated BNPL regulations strengthen consumer safeguards without removing the benefits that make BNPL services appealing. With clearer rules, responsible lending checks, and stronger oversight, Australians can use BNPL services with greater confidence and protection.