The Australian Government announced today that it will introduce consumer protection laws on BNPL products and regulate BNPL providers as consumer credit. The regulatory changes aim to enforce the National Consumer Credit Act (Credit Act) on BNPL providers, ensuring they are overseen by the same consumer protections such as affordability checks as other credit products such as credit cards and loans.

The new legislation will amend the Credit Act to bring BNPL providers under its regulatory framework. The regulatory changes include 1) BNPL providers will be required to hold an Australian credit license, 2) BNPL providers will need to comply with existing credit laws enforced by the Australian Securities and Investments Commission (ASIC), and 3) a new category of 'low-cost credit' will be established under the Credit Act, recognizing the distinct characteristics of BNPL compared to other regulated credit products, such as lower risk and cost to consumers.

Analyst QuickTake: Today’s announcement by the Australian Government on regulatory changes governing BNPL products follows the Consumer Financial Protection Bureau announcing two weeks ago that BNPL providers in the US offer similar legal protections and rights as conventional credit cards.