Parliament has approved legislation to safeguard consumers from Buy Now, Pay Later (BNPL) risks. 

For the first time, BNPL products will be regulated as credit under the National Consumer Credit Protection Act. 

BNPL providers must now hold Australian Credit Licences and adhere to responsible lending obligations. 

The laws aim to curb debt spirals among consumers by ensuring affordability checks and establishing independent dispute resolution mechanisms.  

However, some of the changes only apply to BNPL accounts under two thousand dollars. Many people have multiple, small amount accounts that cause them to enter debt spirals.

The reforms respond to concerns highlighted by the Australian Securities and Investments Commission (ASIC), which reported that 19 per cent of BNPL users in 2022 showed financial stress indicators, such as skipping essential purchases or missing payments on other bills.  

Consumer advocates have praised the legislation. 

The timing of these reforms coincides with record-breaking Black Friday sales, reflecting the growing popularity of BNPL services. 

Australian consumers spent an average of $187.68 per person during the shopping event, with many leveraging BNPL. 

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