Buy Now Pay Later to be regulated as credit: What does it mean for your Afterpay addiction?

By Sara Borman · · 2 min read
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lady using BNPL on phone regulated as credit product

After years of insider demands for regulation on the BNPL industry, it has today been announced that Buy Now Pay Later services are to be regulated under the National Credit Act. 

Announced at the Responsible Lending and Borrowing Conference on 22 May 2023 by Financial Services Minister Stephen Jones, this represents an end to the current extended debate surrounding how to implement BNPL regulation. 

With the consultation paper reporting 7 million active Buy Now Pay Later accounts in Australia over the 2021-2022 financial year, the need for increased regulation in the industry has become clear. 

Of the three options put forward for possible BNPL regulation in last year’s Treasury paper on Buy Now Pay Later, the government has selected the second option: BNPL services must meet modified Responsible Lending Obligations determined by the existing National Credit Act, along with a strengthened BNPL industry code. 

This regulatory option has already been supported by BNPL mainstay Zip, whose co-founder and CEO says: “We have long advocated for fit-for-purpose regulation and we believe that Option 2 delivers the right level of consumer protection while still encouraging innovation across the industry.”

Another major Australian BNPL provider, Afterpay, has previously voiced support for aspects of this option for Buy Now Pay Later regulation.

This was not the option favoured by many consumer group alliances and banks like Westpac, who originally spoke to the danger of allowing the BNPL industry to take advantage of loopholes in creating their own regulatory framework. They favoured option three, in which BNPL services would be subject to the existing National Credit Act.

How will the new BNPL regulation impact me?

It remains to be seen how this will impact your Buy Now Pay Later usage on a day-to-day basis, with specific regulation still to be formalised. 

There will definitely continue to be a clear link between BNPL debt and future borrowing power, and Buy Now Pay Later debt will impact your credit score. It’s important to keep these things in mind, as increased regulation does not mean you can use the services without risk. Low fees and no interest can be enticing, but it’s easy to get in over your head with Buy Now Pay Later products.

If you find yourself at the mercy of late fees and prefer a traditional credit product, check out some of the low rate credit cards below.

Stay on top of what’s happening in the Buy Now Pay Later world at our BNPL news hub. You can also check out the Mozo picks for Best Buy Now Pay Later.

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Last updated 12 January 2025 Important disclosures
  • Citi Rewards - Balance Transfer and Purchases offer

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