Buy now pay later

Buy now pay later (BNPL) is an alternative to traditional forms of credit and allows consumers to pay off goods or services in instalments. BNPL is currently exempt from the NCCP Act and NCC. Because it is not regulated BNPL providers are not required to hold an Australian credit licence. BNPL providers are not required to comply with the credit laws outlined in this chapter. That means BNPL providers are not required to undertake a responsible lending assessment.

Most large BNPL providers have signed up to a voluntary BNPL Code of Practice which includes some consumer protections including financial hardship and dispute resolution standards. The Code forms part of the BNPL contract with the consumer and can be enforced through AFCA against BNPL providers that are AFCA members.

The Government has introduced a Bill to parliament to amend the NCCP Act to regulate BNPL as consumer credit. If passed by the Senate this legislation could potentially become operational by mid 2025.

Buy now pay later

Chapter: 5.7: Understanding credit and finance

Contributor: Stephen Nowicki, Director of Legal Practice, Consumer Action Law Centre

Current as of: 1 September 2024

Law Handbook Page: 370

Next Section: What is a credit contract?