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

Personal Loans Articles

A Credit-Savvy Approach to Loan Comparison: What Every Australian Borrower Needs to Know

Welcome to your essential guide on how to navigate the complex world of personal loans in Australia. Whether you're seeking to finance a major purchase, consolidate debt, or cover unexpected costs, understanding the nuts and bolts of personal loans is crucial. In this conversation, we'll shed light on why being credit-savvy is not just smart, but necessary for anyone considering a loan. - read more

Essential Steps to Take Before Applying for a Loan

Before considering a loan application, it's crucial to have a clear understanding of your current financial position. Start by noting down all sources of income, including salary, any additional earnings, or government benefits. This will give you a comprehensive view of your financial inflows. - read more

The Ultimate Budgeting Checklist for First-Time Loan Applicants

Before diving into the world of loans, it's essential to understand why budgeting is crucial. Budgeting provides a clear picture of your financial status, helping to ensure you can meet future loan repayments without undue stress. - read more

Finance News

Reserve Bank of Australia Increases Cash Rate to 3.85%

21 Feb 2026: Paige Estritori

The Reserve Bank of Australia (RBA) has raised the official cash rate by 0.25 percentage points to 3.85%, marking the first increase in two years. This decision comes in response to rising inflation and aims to curb escalating consumer prices. - read more

Rate Money Introduces Competitive Rate Adjustments Amid Industry Increases

21 Feb 2026: Paige Estritori

In a move that sets it apart from major lenders, non-bank lender Rate Money has announced a modest increase in its variable interest rates by only 15 to 20 basis points on select loan products. This decision comes as many financial institutions implement the full 25 basis point hike following the RBA's recent cash rate increase. - read more

Australian Personal Loan Borrowing Reaches Record Levels

21 Feb 2026: Paige Estritori

Recent data reveals that Australians borrowed approximately $9.3 billion in fixed-term personal loans during the September quarter of 2025, marking a significant increase in personal loan borrowing. The average new personal loan amount stood at $22,643, reflecting a growing reliance on personal loans for various financial needs. - 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

Loan Amortisation Schedule:
This is the formal name for the repayment schedule that shows each of your mortgage payments with a breakdown of how much is applied to principal and how much is applied to interest.