As of June 9, 2025, the Australian government has implemented new regulations to classify buy now, pay later (BNPL) services as credit products, following an announcement made in 2023.

This legislation, introduced by the Albanese government in mid-2024, requires BNPL providers to obtain an Australian credit license and adhere to regulations set by the Australian Securities and Investments Commission (ASIC).

Starting June 10, 2025, BNPL providers will face stricter regulations akin to those governing credit cards, aimed at safeguarding consumers from potentially harmful credit contracts.

Under the new rules, mandatory credit checks will be implemented for consumers using BNPL services, which could negatively impact their credit scores.

Afterpay will now assess the financial situations of new customers to determine spending limits, moving away from a standard $600 limit previously applied to all newcomers.

Existing Afterpay customers wishing to increase their spending limits will also need to undergo a credit check, although the company is not obligated to verify declared incomes.

Michael Saadat from Block, Afterpay's parent company, noted that customers with better credit scores may enjoy higher initial spending limits, while those with lower scores could face restrictions or denial.

A recent CreditSmart study revealed that 20% of Australians utilize BNPL services, yet one-third have never checked their credit reports, highlighting a significant gap in awareness regarding credit implications.

Elsa Markula, CEO of Arca, emphasized that the new regulations could serve as a wake-up call for BNPL users about their credit scores, especially for those planning to apply for loans or mortgages.

BNPL services like Afterpay allow consumers to purchase items with borrowed money, repaying in interest-free installments, which has made them particularly popular among younger demographics.

Consumers are encouraged to stay informed about their BNPL providers' reporting practices and ensure timely repayments to avoid negatively affecting their credit scores.

While the new regulations aim to balance consumer protection and innovation, experts believe the impact on existing BNPL firms may be limited as the regulations primarily affect new customers.