Buy Now, Pay Later could be regulated like credit cards

Under the bill introduced, buy now, pay later providers would be subject to existing credit laws, regulated by ASIC.
buy now pay later regulated

Buy now, pay later (BNPL) services, such as Afterpay and Zip, could soon be regulated credit cards and loans.

A proposed law would require BNPL providers to assess if their program is affordable for a customer. This is aimed at protecting users from accumulating debt.

Assistant Treasurer Stephen Jones introduced the new bill to Parliament today.

Here’s what that might mean for BNPL customers.

What is Buy now, pay later?

BNPL is a financing option that allows customers to pay for items in multiple instalments, rather than upfront. This means the customer can have the item immediately before paying the full cost.

The industry has experienced significant growth in recent years. According to the Reserve Bank of Australia, BNPL services grew by over 50% in the second half of 2020 compared to a year earlier.

Those experiencing financial stress are 75% more likely to use BNPL systems. This is according to a 2022 survey by Monash University of 500 young Australians.

Buy now, pay later is not currently regulated by the same frameworks as credit card companies. This has made it easier for consumers to use BNPL. This is because it doesn’t require the same approval as credit cards or loans, which check a person’s credit history.

The Government cited reports that some people had got into debt with one BNPL account, and opened up numerous others to try to pay it off, “leading to an unmanageable debt spiral.”

BNPL products don’t charge interest on instalments if they are paid on time, but charge late fees if they are missed, which can lead to debt.

How will buy now, pay later be regulated?

Under the bill introduced, buy now, pay later providers would need to have an Australian credit licence. It would also be subject to existing credit laws, regulated by the Australian Securities & Investments Commission (ASIC).

For consumers, this could mean BNPL providers would have to check a person’s credit score and assess whether they‘re able to pay back their line of credit.

This is aimed at protecting financially vulnerable consumers from accumulating debt.


Assistant Treasurer Stephen Jones, who introduced the bill, said: “If it looks and acts like credit, then it should be regulated as such.”

He added that this law reform is aimed at making BNPL schemes a “safer and better regulated” option for consumers.

A Coalition spokesperson told TDA: “It’s important consumers get a fair go. The Coalition will go through the legislation and determine our position through usual party processes.”


The Australian Finance Industry Association said it supports the Government’s approach “in principle”.

The Law Council of Australia said this law is “an important step in improving consumer protection”, because of the disproportionate impact BNPL services have on “disadvantaged and vulnerable consumers”.

Afterpay, which holds a credit licence, told the Treasury that BNPL providers should only need to conduct “partial” credit checks.

Zip held a credit licence before these laws were introduced and also conducts credit checks on customers.

It told the ABC that it’s “supportive of the government holding all providers in the sector to the same minimum standard.”

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