Buy Now, Pay Later (BNPL) — products like Afterpay, Zip, and Klarna — have grown from a retail novelty to a mainstream payment method used by millions of Australians. For years, these products operated outside the regulatory framework that applies to credit cards and personal loans, on the basis that they did not charge interest. New legislation has brought BNPL under the National Credit Act, fundamentally changing the regulatory landscape.
What Changed
Under the new framework, BNPL providers must hold an Australian Credit Licence, conduct affordability assessments before extending credit, provide standardised disclosure documents, and participate in the external dispute resolution system. Customers who cannot afford repayments now have access to hardship provisions. The changes bring BNPL broadly into line with other credit products — though with a modified, proportionate framework that acknowledges the lower-risk nature of small, short-term credit.
The Debt Trap Risk
The case for regulation rested on evidence of harm. Consumer advocacy groups documented cases of BNPL users accumulating multiple accounts across several providers — because there was no credit reporting obligation and providers could not see what a customer owed elsewhere — and falling into debt spirals they could not manage. The population affected was disproportionately young, female, and on lower incomes. The new credit reporting requirements address this directly by enabling affordability assessments to account for existing BNPL obligations.
The Industry Response
The major BNPL providers largely supported a regulatory framework, having operated under a voluntary code that was widely seen as inadequate. Regulation provides certainty and legitimacy — and the largest providers were already conducting some form of affordability assessment voluntarily. Smaller providers with less sophisticated risk management face a higher compliance burden. Industry consolidation is likely to accelerate as regulatory costs make scale more important.
