Buy now pay later products will be subject to stronger regulation with new laws boosting protection for Australian consumers.
The National Credit Code has been extended to buy now pay later contracts, following royal assent of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (the BNPL Act) on 10 December 2024.
From 10 June 2025, providers of buy now pay later contracts will need to hold a credit licence that authorises them to engage in credit activities as a credit provider, subject to transitional arrangements.
Transitional arrangements allow a provider to continue to provide buy now pay later contracts where they have applied for and had their application accepted for the appropriate Australian credit licence or variation of their existing credit licence.
To meet the new licensing requirements, before 10 June 2025 buy now pay later providers who do not have a credit licence must:
- apply for a credit licence
- have ASIC accept the application for lodgement, and
- become a member of the Australian Financial Complaints Authority (AFCA).
If you already have a credit licence, any authorisation you have to engage in credit activities in relation to credit contracts will also apply to buy now pay later contracts. If a buy now pay later provider has a credit licence but it does not authorise them to engage in credit activities as a credit provider, they will need to apply for a variation.
ASIC said it is important that buy now pay later providers act early to apply for or vary a credit licence.
This is because it may take some time to obtain additional information that needs to be included in applications, such as criminal history checks. To minimise the risk of losing the benefit of the transitional arrangements, you should lodge your application by 11 May 2025 as your application needs to be complete and accepted by ASIC by 10 June 2025.
Providers who do not have their application accepted for lodgement by ASIC by 10 June 2025 may be engaging in unlicensed conduct if they continue to operate.
Industry participants should seek to understand the impact of the reforms and update systems and processes as required to comply with the new regime from 10 June 2025.
Please see Information Sheet 285 Buy now pay later credit contracts: Credit licensing (INFO 285) for more information, including how to apply for a credit licence.
Note: Under the BNPL Act, the buy now pay later reforms commence six months after the Act receives Royal Assent, or a date within the six-month period that is fixed by proclamation. The dates indicated in this news item assume that there will be no date fixed by proclamation (i.e. that there will be a full six-month transition period).
Download
- Information Sheet 285 Buy now pay later credit contracts: Credit licensing (INFO 285)
Background
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 amends the National Consumer Credit Protection Act 2009 (National Credit Act) to extend a modified form of the National Credit Code (which is Schedule 1 to the National Credit Act) to buy now pay later contracts.
Under the new regime, some obligations will differ for buy now pay later contracts that meet the definition of a low cost credit contract. For example, providers of low cost credit contracts will be able to elect to comply with modified responsible lending obligations. ASIC will release regulatory guidance closer to the commencement of these new obligations.
ASIC is Australia’s corporate, markets and financial services regulator.