Major Regulatory Overhaul for Buy Now, Pay Later in Australia

Major Regulatory Overhaul for Buy Now, Pay Later in Australia

0

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

Share this news item:

Finance News

Clear

US Involvement in Israel-Iran Conflict Sparks Financial Market Concerns 23 Jun 2025: Paige Estritori The escalating likelihood of the United States engaging militarily in the Israel-Iran conflict has raised alarm among investors, potentially leading to significant market volatility. This concern was highlighted by the global financial advisory firm, deVere Group, as tensions heighten in the Middle East. - read more

Global Markets Brace for Oil Price Surge Following US Strike on Iran 23 Jun 2025: Paige Estritori The recent US military attack on Iranian nuclear facilities has raised expectations of a significant oil price spike as global markets prepare to resume trading. Announced by former President Donald Trump, the attack marks an increased US involvement in the Middle East, which analysts believe could lead to heightened volatility across financial markets. - read more

Trump Mulls Change of Heart on Firing Fed Chair Powell 21 Jun 2025: Paige Estritori US President Donald Trump is once again contemplating the dismissal of Federal Reserve Chair Jerome Powell, whom he has criticized for not lowering interest rates. Trump expressed his dissatisfaction with Powell's decisions in a Truth Social post, suggesting he might change his mind about firing him. Despite acknowledging that his strong criticisms make Powell's task challenging, Trump remains focused on his agenda for reduced rates, especially with Powell's term set to end in May 2026. - read more

Finance Articles Clear The Ultimate Cheat Sheet for Aussie Borrowers: Top Loan Comparison Strategies In the dynamic world of Australian finance, securing a loan can be a pivotal move for individuals seeking to achieve their financial goals. Whether it's for purchasing a dream home, expanding a business, or simply consolidating debt, the importance of smart loan comparison cannot be overstated. With an array of lending products available, borrowers are often faced with a bewildering choice. That's why equipping yourself with powerful loan comparison strategies is not just important, it's essential. - read more A Complete Guide to Caravan Financing: Securing Your Mobile Haven Caravans have surged in popularity across Australia, offering an unmatched fusion of comfort and mobility. This beloved mode of travel grants you the liberty to discover hidden gems off the beaten path while bringing along the comforts of home. With the rise of remote work and the enduring spirit of wanderlust, caravans provide a flexible lifestyle choice for adventurers, retirees, and families alike. - read more The Road to Recovery: How to Rebuild Your Credit for Future Loans In today’s economy, a good credit score is more than just a number—it's a pivotal element of financial health that can open doors to necessary funding when it's most needed. Whether it's for purchasing a new home, investing in a business, or obtaining personal loans, a robust credit score in Australia is your ticket to favorable interest rates and loan terms. - read more The Ultimate Cheat Sheet for Aussie Borrowers: Top Loan Comparison Strategies In the dynamic world of Australian finance, securing a loan can be a pivotal move for individuals seeking to achieve their financial goals. Whether it's for purchasing a dream home, expanding a business, or simply consolidating debt, the importance of smart loan comparison cannot be overstated. With an array of lending products available, borrowers are often faced with a bewildering choice. That's why equipping yourself with powerful loan comparison strategies is not just important, it's essential. - read more Understanding the Fine Print: Fees and Charges in Personal Loans Personal loans are a type of unsecured credit that allows individuals to borrow money for various personal expenses, including consolidating debt, making home improvements, or funding significant life events. Unlike secured loans that require collateral, personal loans rely on your creditworthiness, making them an accessible option for many Australians. - read more The Ultimate Car Loan Checklist for First-Time Borrowers in Australia Welcome to the world of car ownership! If you're a first-time borrower in Australia, you're likely to feel a mix of excitement and apprehension. Acquiring a car loan is a significant financial responsibility, and navigating through the options can be daunting. This introductory guide is designed to set you on the right path to making a well-informed decision. - read more