An estimated 6 million ‘buy now pay later’ (BNPL) active users will soon see new laws introduced by the government that aims to protect them from financial hardship.

In a discussion paper released on Monday, the BNPL sector could be subject to the same laws as credit cards or loan products with three options put forward by the Treasury for assessment.

The weakest option proposed would see additional industry self-regulation, including a new affordability test required for BNPL products.

The middle-tier option would bring the BNPL sector into the National Consumer Credit Protection Act of 2009 via a tailored version of responsible lending obligations.

The toughest option would force BNPL providers to obtain an Australian credit licence and meet responsible lending obligations that applies to all credit providers.

Issues identified by the Treasury paper include inappropriate lending practices that are contributing to financial abuse and excessive consumer fees and charges.

The paper also noted a recent survey conducted by corporate regulator the Australian Securities & Investments Commission found 19% of BNPL customers had to cut back or go without essentials to make repayments on time.

Financial Services Minister Stephen Jones flagged the proposed changes on Monday, saying guardrails needed to be put in place to protect customers from racking up unaffordable debts.

“A lot of people have got not one, not two, but three or four buy now pay later accounts and it appears there is a small percentage of the market where people are getting into hot water," Mr Jones told Nine’s Today program.

"We want to ensure that this product is operating safely where it's being marketed, where it's being pitched to consumers, it's operating within the normal guardrails that operate with other credit products."

The BNPL industry has been given until 23 December to respond to the Treasury paper, with Mr Jones noting legislation would hopefully pass before the end of 2023.

Zip's Head of Australia-New Zealand Cynthia Scott said the BNPL industry is ready for regulation.

“We have been working with the Treasury on options for some time and endorse any changes that give consumers greater confidence when using BNPL products,” Ms Scott said.

“The industry continues to grow very rapidly and regulation is vital as it matures. It is important that appropriate guardrails are in place to ensure consumers are protected.

“Now with buy now, pay later well and truly established in Australia, the time is right for the rest of the sector to raise the bar, providing consistency, visibility and transparency for customers and stakeholders.”


According to the latest research from CreditSmart, almost half (49%) of Australians have used BNPL and of those, 34% have been late on BNPL repayments.

“Our research identified a growing number of Australians are taking on potentially risky credit, such as buy now pay later,” said Geri Cremin, CreditSmart credit reporting expert.

“This trend is becoming more prominent amongst millennials.”

RBA data estimates buy now pay later (BNPL) platforms make up around 1.5% of all payments in Australia.

Read More: Is there any room for BNPL with rates rising and regulation looming?


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