Your favourite way to pay later tightens up: New Buy Now Pay Later Code launches in Australia


Over a year ago, there was talk of a new Code of Practise major Buy Now Pay Later (BNPL) companies were expected to sign. Today, that code is now officially in business. 

Developed by the Australian Finance Industry Association (AFIA), the Code of Practise sets the best practise for BNPL, while ensuring customers are protected. According to the AFIA, the Code is a ‘world first’ for the BNPL sector and will aim to go above standard Australian law.

“From the get go, strengthening consumer protections across the sector was a focus for AFIA and its BNPL members. The Code is explicitly consumer focused and has nine commitments that signatories make directly to the people that use their products and services,” said AFIA chief executive Diane Tate. 

Some of the obligations Buy Now Pay Later companies must abide by include forbidding customers under the age of 18 from using the service and prohibiting users in financial hardship from making additional purchases on the platform. 

Other rules include capping late payment fees and conducting customer checks before they approved for the service.

Which Buy Now Pay Later providers are included under the Code?

Both BNPL giants Afterpay and Zip will now have to abide by the Code of Practise as well as Klarna and Payright, and many others. 

Payright co-chief executive officer, Myles Redward says the Code will be welcomed, as it already aligns to the company’s existing values. 

“In helping to shape the voluntary code, not only are we committed to the principle of appropriate consumer protections, we’ve built our business model on that very premise based on the notion of shared success – whether it be through the nature and terms of our payment plans, our approach to fees and charges, or our robust credit decisioning processes”, he said.

Is there more to be done? Experts say yes.

Although the Code of Practise may be a step in the right direction, many experts have argued that it is now time for the Government to step in to ensure BNPL companies are kept on a short leash. 

The foundation for this argument is around the fact the Buy Now Pay Later is a form of credit and should therefore be regulated like other credit products. 

“These services are growing at a breathtaking rate and ASIC’s research has shown that at least one in five consumers are missing payments. As this industry continues to grow, we will see increased debts and increased financial hardship,” said Financial Rights Legal Centre chief executive officer, Karen Cox. 

That same ASIC Buy Now Pay Later report also revealed that more than half (55%) of those surveyed confessed to having more than one account on the go. 

“Right now, there is no obligation for BNPL providers to assess a person’s ability to repay debt or handle a consumer’s complaint fairly. We are glad to see the new Code requires membership in AFCA, but that is no replacement for proper regulation.”

Want to learn more about how BNPL works? Take a look at our detailed Buy Now Pay Later guide and our even more detailed Buy Now Pay Later statistics report