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From 10 June 2025, buy now, pay later (BNPL) products will be regulated under the National Consumer Credit Protection Act, aligning them with traditional credit products for the first time.
The changes will introduce new requirements for affordability checks, responsible lending practices, and stronger consumer protections. However, questions remain over how BNPL use will affect borrowers’ credit scores and access to finance.
The federal government released a further exposure draft of the planned reforms in early February this year after receiving substantial feedback from industry representatives, consumer advocates, and regulatory agencies.
Clayton Howes, CEO and managing director at non-bank lender MONEYME, welcomed the move, describing the reforms as a “step in the right direction for stronger consumer protections”.
“It will also give lenders a more complete view of a borrower’s credit commitments, which will help all lenders make more responsible lending decisions,” Howes said.
“Bringing BNPL under the same regulatory framework as other credit products will help ensure affordability checks and better transparency, both of which are positives for Australian consumers.”
Despite this support, Howes expressed concern about lingering uncertainty with less than two months before the rules take effect.
“There is still too much uncertainty around how BNPL usage will impact consumers’ borrowing power,” he said.
“This lack of clarity makes it difficult for millions of Australians to plan ahead, particularly Gen Z and Millennials, of whom roughly 60 per cent use BNPL.
“The impact will depend on how industry interprets and applies these regulatory changes, but clearer guidance is needed sooner rather than later.”
Assistant Treasurer Stephen Jones said in February that the reforms aim to balance consumer protection with industry growth.
Key provisions include:
Strengthened consumer protections: BNPL providers will need to perform affordability checks, follow responsible lending practices, and identify vulnerable consumers.
Transparent pricing and disclosure: New rules will require clear information on fees and charges, along with fee caps to prevent excessive costs.
Industry-wide accountability: The reforms establish consistent standards for all BNPL providers, creating a more predictable environment for investment and innovation.
The government said that the measures are designed to provide appropriate safeguards while allowing the BNPL sector to continue evolving responsibly.
The Albanese government has pledged to conduct a review of the regulations two years after they are implemented, using feedback from stakeholders to assess their effectiveness.
[RELATED: Government set to finalise BNPL regulations]
