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Major Regulatory Overhaul for Buy Now, Pay Later in Australia

Major Regulatory Overhaul for Buy Now, Pay Later in Australia

Major Regulatory Overhaul for Buy Now, Pay Later in Australia?w=400
The Buy Now, Pay Later (BNPL) sector in Australia is on the brink of significant transformation as new regulatory measures come into effect, equating BNPL services with traditional credit products like credit cards.
Effective from June 10, 2025, all key players in the BNPL market, including Afterpay, Zip, and Humm, along with low-cost credit contracts, will be required to operate under stringent regulatory standards established by the Albanese government.

This legislative shift mandates BNPL providers to secure an Australian credit license and adhere to existing credit laws overseen by the Australian Securities and Investments Commission (ASIC), which includes conducting thorough financial evaluations of consumers. The initiatives aim to protect consumers from engaging in potentially harmful financial agreements by enforcing greater accountability from BNPL operators.

BNPL products have emerged as Australia's third most utilized credit service, prominently trailing credit cards and home loans. However, the regulatory update will now influence how BNPL transactions appear on individuals' credit reports, potentially affecting consumers' credit scores due to mandatory credit checks and detailed reporting of individual repayment histories.

The demographic heavily engaged with BNPL includes young consumers, with Millennials accounting for a significant portion. Despite the popularity, a portion of this demographic remains unaware of BNPL’s impact on their credit profiles.

With the new regulations, BNPL transactions are integrated into broader credit checks. Consumers are being advised to stay vigilant, ensuring timely repayments to protect and possibly enhance their credit ratings, thus improving their eligibility for more traditional credit products in future.

Industry experts like Elsa Markula emphasize the importance of these regulations in providing transparency and promoting responsible consumer behaviour. Markula notes that these changes can serve as an opportunity for individuals, particularly younger Australians or those new to credit, to bolster their credit profiles when managed astutely.

Looking ahead, consumers should regularly monitor their credit reports and remain informed about updates from their BNPL providers. The message is clear: use credit wisely and only apply when absolutely necessary to avoid signalling financial distress to lenders.

Published:Tuesday, 10th Jun 2025
Source: Paige Estritori

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