Buy Now, Pay Later Services in Australia: Convenience vs. Responsibility

Buy Now, Pay Later Services: Balancing Convenience with Responsibility

How can you responsibly use Buy Now, Pay Later services in Australia?

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Millions of Australians use Buy Now, Pay Later (BNPL) services, such as Afterpay, Zip, humm, and Klarna, to make purchases and pay back the amount in instalments. However, concerns have been raised about the easy credit offered by these services and the potential harm it can cause to vulnerable individuals. The Australian government has promised to crack down on the industry by the end of the year, with a focus on ensuring appropriate checks are in place to prevent the inappropriate marketing of credit to vulnerable groups.

According to a study by the Reserve Bank of Australia, there were 7 million active BNPL accounts in the last financial year, worth $16 billion or 2% of Australian card purchases. Many users of BNPL services use them to make small purchases under $2,000, but some services, such as humm, offer much larger sums up to $30,000.

While BNPL services offer benefits such as fast and easy access to credit, the government is concerned that they may not be as secure as traditional banking methods. There are also concerns that the easy credit offered by BNPL services may be causing immeasurable harm to vulnerable individuals.

To address these concerns, the government has been considering three options to reform the laws governing BNPL products. One option is to treat BNPL services like credit cards, which would provide greater protections to consumers. Consumer groups, the Australian Securities and Investments Commission (ASIC), and some of Australia's biggest banks support this option.

Another option is to establish a tougher industry code for BNPL services, which would require companies to conduct suitability assessments for purchases under $2,001. The industry body, the Australian Finance Industry Association (AFIA), which represents 90% of BNPL providers, has pushed for this option.

The third option is to establish bespoke regulation under the credit act for BNPL services, which would give greater powers to ASIC to regulate the industry. BNPL providers have offered support for this option.

Despite concerns about the potential harm caused by BNPL services, there are also benefits to consumers. For example, consumers can borrow money without paying interest if they make payments on time. The challenge facing the government is to strike a balance between innovation, competition, credit provision, and consumer protection.

Published: Wednesday, 1st Mar 2023
Author: Paige Estritori

Rate this article

0 Comments

No comments yet. Be the first to share your thoughts.

Personal Loans Articles

How Responsible Lending Checks Work for Personal Loans in Australia

Responsible lending checks help lenders assess whether a personal loan is suitable for an applicant's needs and affordable based on their financial situation. Here's why lenders ask detailed questions about income, expenses and loan purpose in Australia. - read more

Interest Rates, Comparison Rates and Personal Loan Fees Explained

Personal loan interest rates are only one part of the borrowing cost. This guide explains how interest rates, comparison rates, fees and loan terms affect repayments and the total cost of a personal loan in Australia. - read more

How to Boost Your Loan Approval Chances

Getting a loan approved can be a critical step in achieving your financial goals, whether it's buying a home, starting a business, or consolidating debt. However, the loan approval process can often be complex and challenging, with many Australians facing difficulties in securing the loans they need. - read more

Finance News

New Card Spending Signals Keep Pressure on Household Borrowing

13 Aug 2026: Paige Estritori

Australia's latest retail payments snapshot keeps the spotlight on how households are using cards to manage everyday costs, irregular bills and discretionary spending. While monthly card figures can move around due to seasonal shopping patterns, tax-time expenses and changes in consumer confidence, the broader message remains important for borrowers: short-term spending decisions can quickly affect longer-term debt capacity. Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check! - read more

What Rising Personal Credit Means for Australian Borrowers

06 Aug 2026: Paige Estritori

The Reserve Bank of Australia's latest credit figures point to a continuing theme for households: Australians are still using personal credit as budgets remain under pressure. While housing and business lending often dominate the headlines, movements in personal credit are important because they can reveal how consumers are funding vehicles, renovations, travel, debt consolidation and unexpected expenses. Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check! - read more

What the RBA's Latest Rate Signals Mean for Personal Loan Borrowers

30 Jul 2026: Paige Estritori

The Reserve Bank's latest public commentary has kept attention firmly on inflation, household spending and the outlook for interest rates. For Australians considering a personal loan, the key message is not that borrowing conditions will change overnight, but that lenders are still operating in a market where funding costs, risk appetite and customer affordability remain under close watch. Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check! - read more

Click for more Finance News

Need Help Finding a Loan?

Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!

All finance quotes are provided free (via our secure server) and without obligation. We respect your privacy.

Knowledgebase

Interest Rate:
A rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a resul