The Buy Now, Pay Later (BNPL) industry will undergo major regulatory changes in Australia. From 10 June 2025, BNPL providers will be required to operate under stricter regulations, bringing them in line with traditional credit providers such as banks and credit card companies.
What’s Changing?
The Australian government is introducing these reforms to provide greater consumer protection while ensuring BNPL remains a viable and competitive alternative credit option.
Here’s what’s new:
Licensing Requirements for BNPL Providers
Currently, BNPL providers have been operating under a less regulated framework. However, starting from June 2025, all BNPL providers will be required to hold an Australian Credit Licence (ACL) or have applied for one.
What This Means for Businesses:
If your business partners with BNPL providers, ensure that they are licensed by verifying ASIC's Professional Registers.
Licensed providers will have a more transparent lending policy, reducing the risk of both businesses and consumers.
Mandatory AFCA Membership for Dispute Resolution
All BNPL providers must become members of the Australian Financial Complaints Authority (AFCA), ensuring that consumers have access to independent dispute resolution mechanisms.
Why This Matters for Business Owners:
If customers engage in disputes over BNPL transactions, they can now escalate complaints through AFCA, ensuring greater accountability from suppliers.
Responsible Lending Obligations Introduced
One of the most significant changes is that BNPL providers must now comply with responsible lending obligations, similar to traditional credit providers. This means:
Credit checks and assessments on consumers before approving BNPL transactions.
Stronger disclosure requirements, ensuring customers understand repayment terms and potential fees.
Stricter controls on lending to high-risk consumers, helping to reduce financial hardship.
Key Takeaways for Business Owners:
Stricter eligibility criteria may impact purchase approval rates, requiring businesses to adjust marketing strategies if BNPL usage declines. Some customers may seek alternative payment methods, so it’s a good time to reassess your payment options.
Strengthened Consumer Protection Standards
To prevent predatory lending practices, BNPL providers must now:
Offer clear pre-contractual disclosures, ensuring transparency in fees and terms.
Adhere to a modified version of the National Consumer Credit Protection Act, specifically designed for low-cost credit products.
Align policies with anti-money laundering (AML) and fraud prevention regulations.
How These Changes Impact Small & Medium Businesses
While these regulations aim to protect consumers, they will also have ripple effects on businesses:
Tighter BNPL approvals may mean fewer instant purchases from customers who previously relied on flexible repayment terms.
Businesses offering BNPL at checkout may need to adjust their customer financing options.
Increased compliance costs for BNPL providers could lead to higher merchant fees.
These changes bring benefits by strengthening consumer protections, building trust in BNPL
transactions, reducing financial hardship, and safeguarding businesses from fraudulent or
irresponsible activity.
What Businesses Should Do Next
With these changes on the horizon, now is the time to prepare. Here’s what you can do:
Review your current BNPL provider’s compliance plans – Are they licensed? Are they adjusting their terms?
Communicate with customers – Update them on how these changes may affect their BNPL purchasing experience.
Evaluate alternative payment methods – Consider flexible payment solutions that align with your customers’ needs.
If you need guidance on how these changes could impact your bookkeeping, cash flow, or compliance strategy, please do not hesitate to contact us.
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