Australia
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Australia is making yet another move in the regulatory realm of payments with new rules around buy now, pay later (BNPL) services.

The government of Prime Minister Anthony Albanese has introduced legislation to the House of Commons targeting enhanced consumer protection around BNPL products.

The main objective of the legislation is to cover BNPL services under the National Consumer Credit Act (Credit Act). This will require BNPL firms to hold an Australian credit licence.

BNPL providers will be regulated by and have to comply with existing credit laws upheld by the Australian Securities and Investments Commission (ASIC). A new category of ‘low-cost credit’ will be established to reflect, as the government puts, “the lower risk and cost of BNPL compared to other regulated forms of credit”.

“The government is working hard to protect consumers against financial harm,” said Assistant Treasurer and Minister for Financial Services, Stephen Jones MP.

Although the government has voiced concerns about BNPL consumer protection gaps, it has also noted some positives about the sector. Policymakers recognise that BNPL provides consumers access to small amounts of credit and has helped drive competition in the credit markets.

It has also cited figures from the Australian Finance Industry Association (AFIA) that BNPL supports over 120,000 local jobs and contributes $18.4bn to Australian GDP, and a survey from the Good Shepherd found 84% of financial practitioners reported that clients had tried to manage debt by opening BNPL accounts.

Jones continued: “We want Australians to enjoy the benefits of BNPL, while knowing there are strong consumer protections in place. If it looks and acts like credit, then it should be regulated as such.

“Our changes are balanced and proportionate and maintain the consumer benefits afforded by BNPL products.”

The legislation’s introduction to parliament comes just under a month after the passage of the Digital Identity Bill 2024 and the Digital Identity (Transitional and Consequential Provisions) Bill 2024, another landmark moment for Australian finance and payments.

In a separate development, one with significance for both the country’s betting and payments sectors, in December 2023 the Interactive Gambling Amendment Bill was approved by the Senate, introducing a ban on credit cards for gaming transactions.