BNPL providers will now be captured by the credit licensing regime. With a six (6) month transition period in place, now is the time for BNPL providers to consider their licensing options to ensure that from 10 June 2025 onwards, they hold the appropriate credit licence.
For BNPL providers who already hold a credit licence, any authorisation on the credit licence will also apply to BNPL contracts.
BNPL providers who do not already hold a credit licence must do the following before 10 June 2025:
- Apply for a credit licence;
- Have their application accepted by ASIC; and
- Become a member of the Australian Financial Complaints Authority.
ASIC has stated that in order to ensure an application is accepted by 10 June 2025, BNPL providers must lodge their application by 11 May 2025.
What contracts are included in the BNPL reform?
The new legislation introduces three key definitions:
- BNPL contract
- BNPL arrangement
- Low Cost Credit Contract (LCCC)
A BNPL contract is a contract between a consumer and a credit provider that is part of a BNPL arrangement. The requirement that there is, or may be, a charge made for the provision of credit does not apply to a BNPL contract.
A BNPL arrangement is an arrangement where:
- a merchant supplies goods or services to a consumer;
- a third party (a BNPL provider) pays the merchant some or all of the purchase price of the goods or services; and
- there is a contract between the BNPL provider and the consumer, for the provision of credit in connection with the supply of the goods or services.
A LCCC is a contract which satisfies the definition of a buy now pay later (BNPL) contract, and:
- the contract satisfies the requirements relating to fees or charges prescribed by the regulations (these are still in draft); and
- the period during which credit is, or may be, provided under the LCCC is no longer than the period (if any) prescribed by the regulations.
If you need help with applying for an Australian Credit Licence, you can contact us here.
Further Reading
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024(Bill) was passed by Parliament in December last year and received royal assent on 10 December 2024.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
