Already weakening BNPL growth may be stymied further by regulation, research shows
Research from the global banking regulator shows BNPL lending growth is particularly vulnerable to the kind of regulation now being introduced in Australia.
Greater integration of buy now, pay later (BNPL) into traditional credit regulation — which has just happened in Australia — stymies the growth of the sector, according to new research published by the global banking regulator.
The Australian government passed legislation at the end of 2024 to regulate BNPL under the National Consumer Credit Protection Act 2009 (Cth) (Credit Act). But in a concession, BNPL can still use a regime with lower obligations while the regulation is new.
The regulation allows such concessions for so-called “low cost credit contracts” (LCCCs) including BNPL. At the same time, however, the sector will also face greater responsible lending obligations (RLO), though again with some leeway.
It is these kinds of incrementally greater obligations that Bank for International Settlements (BIS) research found had a particularly dampening impact on BNPL use. And it particularly affects customers with impaired credit records — an increasing proportion of the Australian BNPL market, according to consumer counselling and complaints services.
