Buy now pay later: how it works and the new rules

Buy now pay later (BNPL) lets you take something home today and pay for it in instalments. It can feel like it isn’t really borrowing, but it is, and it now comes with the same basic protections as other credit.

How buy now pay later works

Most BNPL plans split a purchase into a few equal payments. A common pattern is four payments over about six weeks, with the first one paid at checkout.

• You usually don’t pay interest if you pay on time.
• The provider earns money from fees charged to the shop and, in some cases, from fees charged to you.
• Payments usually come out of your bank account or card automatically.

Some services work differently, with longer terms or monthly account fees. Always check the terms before you sign up.

The rules changed in June 2025

Since 10 June 2025, BNPL is regulated under the National Credit Act, the main law for consumer credit in Australia. This means:

• Providers need an Australian credit licence from ASIC.
• They must check whether the credit is suitable for you before you sign up or before raising your limit. Many BNPL providers use a lighter version of these checks for small, low-cost plans, but they still need to do them.
• They must offer hardship help if you can’t keep up with payments.
• They must belong to the Australian Financial Complaints Authority (AFCA), so you can make a free complaint if something goes wrong.

For BNPL plans that use the lighter checks, the law also limits the total fees you can be charged. For example, if a plan charges both account fees and late fees, account fees are capped at $200 and late fees at $120 in the first 12 months (2026–27).

Your credit report

BNPL providers can check your credit report when you apply. They can also report missed payments and defaults.

A default on your credit report can stay there for five years. It may make it harder to get a phone plan, a car loan or a home loan later.

When small plans add up

Each BNPL purchase can seem small. The problem comes when several plans overlap.

Some ways to stay in control:

• Keep a list of every active plan and when each payment is due.
• Set a limit for yourself, such as no more than one or two plans at a time.
• Make sure there’s money in your account the day before each payment.
• Only use BNPL for things you could afford to buy outright today.
• Avoid using BNPL for everyday essentials like groceries or bills. If you need to, it’s a sign your budget needs attention.

If you’re struggling to pay

Contact the provider as soon as you can. Because BNPL is now regulated credit, you can ask for financial hardship help. This could include more time to pay or a change to your payment plan.

• Ask for hardship help in writing, or by phone, and keep a record.
• Stop making new purchases until you are back on track.
• Don’t take out another loan to pay off BNPL debts without getting free advice first.

If the provider doesn’t help, or you think it treated you unfairly, you can complain to AFCA for free.

Where to get free help

• National Debt Helpline – free financial counselling on 1800 007 007 or https://ndh.org.au
• Australian Financial Complaints Authority – free complaints service on 1800 931 678 or https://www.afca.org.au
• ASIC – information on BNPL rules at https://asic.gov.au