Buy-now-pay-later has been the feel-good payments story of the past decade: interest-free instalments, a tap-and-go checkout, no bank-manager questions. By mid-2024, Australia had approximately 7 million active BNPL accounts with an average transaction value of A$136. Yet the same scale that made Afterpay and Zip household verbs, has also drawn regulator heat. On 10 June 2025, the heat crystallised into law. From that date, every BNPL operator must:
- hold an Australian Credit Licence (ACL),
- run credit and affordability checks, and—most explosively—
- report all applications, limits, and defaults to the mainstream credit-reporting bureaus.
The rules sit inside the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 and ASIC’s new INFO 285. They pivot BNPL from a “tech hack” around the National Credit Code to a fully-fledged consumer credit.
Why this moment matters
Until now, BNPL providers could decide whether to ping a bureau or stay off-grid; most chose the latter to preserve the frictionless sign-up that drove growth. On the other hand, consumers often mistakenly believed instalments were invisible to lenders. ASIC’s guidance is blunt: providers that miss the licence deadline “may be engaging in unlicensed conduct if they continue to operate.”
Hidden within those compliance paragraphs is a structural jolt to personal finance. Every Afterpay sign-up, every Zip limit increase, every missed Klarna instalment, will now flow into the same credit files that decide mortgage rates. Finder’s latest spending survey shows 33% of Australians—about 6.9 million people—regularly spend more than they earn, a pattern propelled by easy instalments. From June, that behaviour could now negatively influence credit scores.
What changes for providers
The licensing package is rigorous but familiar to anyone who issues credit cards. BNPL firms must:
- lodge an ACL application (or variation) by 10 June;
- prove minimum base capital of A$150,000 (A$250,000 if holding customer funds);
- integrate bureau data into underwriting, not just KYC;
- join the Australian Financial Complaints Authority and embed dispute-resolution timelines;
- hand ASIC an annual compliance report plus an auditor-signed financial statement four months after year-end.
INFO 285 makes clear that an ACL for “credit provider” automatically covers BNPL, but licences that only authorised “intermediary” activity must be varied. The regulator expects most players to require a variation rather than a new licence, yet even a variation demands board-level governance and capital calculations that some venture-backed start-ups have never undertaken.
The bureau ripple: stronger profiles—then a hangover
Credit bureaus like Equifax, Illion, and Experian have lobbied for years to capture BNPL data, arguing it fills “thin” files for younger borrowers. They won that argument on 10 June. Every application became an enquiry entry; every on-time repayment can lift a score; every late fee, if overdue long enough, lands as a default.
Short-term, bureau files should get richer. A 22-year-old who pays Afterpay religiously might see their credit score rise, making a first-car loan cheaper. But a missed A$100 GoCardless instalment—common when wages hit different weeks—could shave 50 points, enough to bump a mortgage rate. Finder’s personal-finance analysts reckon 38% of Gen Z and Gen Y admit to overspending via BNPL. Their “buy now, regret later” habits will show up in black and white.
The bureau change also neuters a common BNPL marketing pitch: “won’t affect your credit.” From June, every homepage disclosure must warn that usage will be visible, or risk breaching ASIC’s longstanding truth-in-advertising obligations.
Knock-on effects for banks and retailers
Banks stand to gain. Mortgage underwriters finally get a full view of discretionary credit. Commonwealth Bank had already argued that the blind spot distorted affordability tests; CEO Matt Comyn’s 2021 Senate testimony called for bureau reporting across the sector. For lenders, the reform should reduce surprises and lower delinquency risk.
Retailers face a mixed bag. BNPL drove basket-size growth, but also led to higher refund costs and increased fraud. Licence obligations will raise provider operating costs. Afterpay and Zip have not published revised merchant-discount rates, but executives concede compliance will “tighten margins” (Zip’s commentary in its August 2024 results call). If fees rise, merchants may shift back to cards or bank account-to-account alternatives like PayTo.
Will the licence deadline stick?
ASIC knows start-ups move slowly. A transitional window lets firms keep operating if they file an application that ASIC “accepts for lodgement” by 10 June. However, acceptance is the first step; substantive approval can take up to nine months. Lawyers warn that conditions could include capital top-ups, director background checks, and live underwriting audits.
Industry bodies want more time. The Australian Finance Industry Association urged Treasury to stage obligations—licence first, bureau reporting later—arguing that some technology stacks cannot plug into Illion or Equifax in weeks. Treasury’s explanatory memorandum rejects a long delay, citing “urgent consumer-protection need,” but hints that enforcement will be “proportionate.”
Still, ASIC’s track record on unlicensed lenders is clear: it has prosecuted payday operators within weeks of a deadline lapsing. Expect the regulator to make an example of any BNPL brand that continues to sign new customers without an accepted licence application.
International context: from light-touch to level playing field
Australia is not alone. The UK’s FCA, after four years of consultation, is drafting BNPL rules that echo credit-licence and bureau-reporting requirements. New Zealand’s Credit Contracts Act amendments took effect last year. But Australia’s 10 June line-in-the-sand is arguably the sharpest globally—no proportional carve-out for “low-limit” offers, no indefinite sandbox.
Why the urgency? Inflation and arrears. RBA data show household repayment stress at a ten-year high; Zip’s BNPL late-fee income grew 24% in FY 2024. The government’s May 2025 budget papers flagged “longevity of inflation expectations” partly tied to “unsecured consumer credit growth via BNPL.” Legislators concluded that letting millions of micro-loans stay off the radar would undermine monetary-policy tightening.
What consumers should do now
Financial counsellors are bracing for calls in July when the first bureau alerts hit. The National Debt Helpline advises users to:
- download their free credit report before 10 June to establish a baseline;
- set up alerts with bureau apps to catch score swings;
- align pay cycles with instalment schedules to avoid accidental misses.
They also warn that reversing BNPL defaults is harder than disputing, say, a mobile-phone bill: platform terms often state that fees compound once an instalment is overdue.
A turning-point for the business model
BNPL thrived on a loop: frictionless sign-up drives volume, volume drives merchant-discount revenue, revenue subsidises free instalments. Compliance filings, bureau integrations and responsible-lending checks slow the loop and add cost. Providers may pivot toward longer-tenor, interest-bearing plans or morph into regulated line-of-credit products.
Zip already reports that credit-loss rates fell from 2.7% to 1.8% after trialing bureau checks on new users, conceding that upfront diligence costs less than downstream collections. Investors rewarded the news with a 9% share-price bump. Afterpay, now owned by Block, has piloted soft credit pulls in Canada since 2024; executives say Australia will “adopt similar underwriting signals.”
The business model survives, but the word “loan” finally catches up with the marketing slogan “pay later.”
Final word
10 June 2025 was not just a compliance deadline; it’s the day BNPL grows up. Providers became licenced credit shops, consumers gain (or lose) bureau points with every tap, and Australia’s credit files gain unprecedented granularity on small-ticket debt.
For borrowers, the trade-off is transparency: instalments may aid a thin file, but missed payments will bite harder. For providers the calculus shifts from land-grab to sustainable risk pricing. And for regulators, the reform is a test case—if bureau reporting and licensing curb arrears without killing innovation, other markets will likely follow Australia’s blueprint.
The era of invisible instalments is over; from 10 June the bills came due—in both dollars and credit scores.
