Australia: BNPL - If it looks like credit, acts like credit, regulate it

In brief

The assistant Treasurer and Minister for Financial Services Minister Stephen Jones addressed the annual Responsible Lending & Borrowing Summit in Sydney. His speech is available here. His speech announced that Buy Now, Pay Later (BNPL) payment arrangements will be regulated as credit and enforced by the Australian Securities and Investments Commission (ASIC).


In an effort to make good on the Federal Government's commitments to take a tougher stance in the regulation of BNPL arrangements, this announcement seeks to set into effect the second option presented by the Treasury in November 2022. As discussed in our prior client alert, the second proposed option was presented as the 'moderate' or 'tailored approach to bring BNPL arrangements under the Credit Act and subject to responsible lending obligations, while remaining distinct from other licensed credit providers. It will require BNPL providers to assess suitability for customers, and to hold an Australian credit licence. ASIC will also be given 'strong enforcement powers'. Alternative options that were on the table included self-regulation within the BNPL industry and the more onerous option of treating BNPL like credit cards and other loans requiring full regulation under the Credit Act. Based on the Minister's strong language one could be mistaken by assuming that the option Treasury had landed on was the more onerous alternative and not the moderate option 2.


There are now approximately 7 million BNPL accounts in Australia. It has been acknowledged that BNPL has provided financial opportunities to the many people who use it, however, according to Treasury's consultation, has also created great risk to those caught in a vicious debt cycle.

On 21 November 2022, the Treasury released an options paper  which offered three options to regulate BNPL.  As noted above, the options ranged from less onerous strengthening existing industry codes and self-regulation (option 1) to more onerous by means of a full Australian credit licence (option 3).

Based on its subsequent consultation, Treasury now concludes that because "BNPL looks like credit, it acts like credit, it carries the risks of credit". It therefore has announced that "government will change the law, so that buy now, pay later products are regulated as credit products."  Although the language of the announcement appears to take a hard line approach, the speech announced that Treasury has set itself on the middle 'moderate' option 2, which brings BNPL arrangements under the Credit Act, but under a tailored regime.

Key takeaways 

Under the proposed plan effectuating option 2, BNPL providers will be required to:

  • Hold an Australian Credit Licence
  • Comply with Responsible Lending Obligations
  • Meet statutory dispute resolution and hardship requirements
  • Comply with statutory product disclosure and other information obligations
  • Abide by existing restrictions on acceptable marketing
  • Meet a range of other minimum standards in relation to their conduct, and in relation to their products

Next steps 

The Treasury aims to work closely with the industry and consumer groups in the coming months to draft legislation, planning for such draft legislation to be rolled out later in 2023. A final Bill is expected to be introduced to Parliament by the end of the year.

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