Global: Australia Mandates Credit Licences for BNPL Providers Ahead of New Regulations

Buy Now, Pay Later (BNPL) providers operating in Australia must now apply for credit licences under amended legislation set to take effect in June. The popularity of BNPL products from companies like Afterpay, Klarna, and Zip has surged in recent years, with approximately 40% of Australians using such services in the first half of last year, according to a Finder survey.

Previously, BNPL products were largely exempt from the National Consumer Credit Act. However, recognizing the regulatory gap, the Australian government revised the Act last year to mandate that BNPL providers obtain credit licences and adhere to existing consumer protection laws.

New Regulatory Framework for BNPL Services

The updated legislation introduces a distinct category of ‘low-cost credit’, designed to reflect the reduced risk and cost associated with BNPL offerings compared to traditional credit products. This framework ensures that BNPL services are subject to stricter oversight while recognizing their unique market position.

Compliance Deadlines and Requirements

Under the revised Act, the Australian Securities and Investments Commission (ASIC) has directed BNPL providers to take immediate action. Companies must:

1. Apply for a credit licence.
2. Have their applications accepted for lodgement by ASIC.
3. Join the Australian Financial Complaints Authority (AFCA) by June 10, 2025.

To ensure compliance, ASIC is encouraging BNPL providers to submit their applications early, no later than May 11, 2025, as the process may require additional time for gathering supporting information.

Enhancing Consumer Protection

This regulatory shift aims to strengthen consumer protections in the rapidly growing BNPL sector, aligning it with broader financial industry standards. By bringing BNPL providers under the purview of the National Consumer Credit Act, the government seeks to balance innovation with accountability, ensuring responsible lending practices.

With the amended regulations, Australia positions itself at the forefront of global efforts to regulate BNPL services effectively, promoting financial transparency and safeguarding consumer interests.