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Australian Government to Regulate Buy Now, Pay Later Industry as Credit Products

The Australian government is to regulate the buy now, pay later (BNPL) industry by treating BNPL services as credit products. The move comes as concerns over consumer protection and responsible lending practices in the rapidly expanding sector have escalated.

Late last year the Australian government began an extensive consultation on options to regulate BNPL. This week, Stephen Jones, the Australian Financial Services Minister, made the reform announcement during his speech at the Responsible Borrowing and Lending Summit held in Sydney.

According to Jones, the BNPL industry has experienced remarkable growth, with approximately seven million active BNPL accounts in Australia. Studies from the Australian Financial Industry Association indicate that in 2022, BNPL generated an additional $2.7billion in new revenue for merchants.

However, evidence suggests that certain risks disproportionately affect vulnerable groups, including women First Nations communities and individuals with lower incomes. By treating BNPL services as credit products, the government seeks to establish a regulatory framework that ensures fairness and transparency in the industry.

Under the new regulations, BNPL providers will be required to hold Australian Credit Licences, comply with Responsible Lending Obligations, and meet statutory dispute resolution and hardship requirements. This decision aims to create a level playing field for all credit providers and safeguard consumers from potential risks and excessive debt.


“BNPL has provided a valuable source of competitive pressure on traditional credit products, such as credit cards or payday loans,” said Jones. “But with those opportunities have come new and growing dangers to consumers, which up until now have been largely unregulated and unchecked.”

“We have heard that some people are opening multiple BNPL accounts, to access far more debt than they’d be able to get on a credit card or a payday loan. And we have also heard that some people may be weaponising BNPL products in abusive relationships – doing things like coercing their partners to take on BNPL debts or taking out BNPL debts in their partner’s name without their knowledge.

“BNPL looks like credit, it acts like credit, it carries the risks of credit. We want to have exposure draft legislation out for consultation later this year. And we will introduce the final Bill into the Parliament by the end of the year.”

‘Measured regulation’

FinTech Australia, the peak body representing Australia’s fintech industry, has welcomed the reforms. Rehan D’Almeida, its general manager, emphasised the importance of measured regulation to foster trust in the fintech sector and promote its growth.

“We are pleased the Government is taking this approach. Measured regulation is crucial in ensuring trust in Australia’s fintech industry, which is essential for its growth. In our experience, the sector, and its founders, endeavour to grow their companies in a responsible manner. Considered regulation sets the bar for the sector and ensures that building trust and enhancing the lives of its consumers remains at its core.”

“This framework strikes a balance, designing a scalable and technology-neutral framework that embeds strong and effective consumer protections. Crucially, it recognises the distinct differences between BNPL and traditional credit products, and is a vote of confidence in a sector that delivers positive outcomes for customers, businesses and the broader economy.

“As new technologies and digital services disrupt and create better consumer experiences, we need regulatory frameworks that value these innovations, protect consumers, and encourage competition. Regulation that is proportionate and fit-for-purpose will ultimately help propel Australia’s digital economy forward and retain the benefits and opportunities this sector generates for our economy.”


  • Claire is an experienced editor and writer with 25 years of experience in the publishing industry. As a tech journalist, Claire has covered every subject possible over the years, from the launch of broadband and next generation mobile networks to the arrival of the metaverse and Web3.

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