As of June 10, 2025, Buy Now Pay Later (BNPL) services in Australia, including AfterPay, are subject to new regulations designed to enhance consumer protection and ensure responsible lending practices. These changes are significant for ecommerce businesses that rely on AfterPay as a payment option. In this blog post, we’ll break down everything you need to know as a brand owner, ensuring you can navigate these updates seamlessly and continue offering a smooth payment experience for your customers.
What you need to know?
If you offer AfterPay as a payment option, there’s important news you need to know. On June 10, 2025, new regulations for Buy Now Pay Later (BNPL) services took effect, and they could impact how you and your customers use AfterPay. At Ecommerceboost.io, we’re here to help you stay ahead of the curve with all the details you need to keep your sales flowing and your customers happy.
What is BNPL and Why Does It Matter?
Buy Now Pay Later (BNPL) has transformed online shopping in Australia, allowing customers to split their purchases into manageable installments without interest or hidden fees. Services like AfterPay have become a staple for many ecommerce businesses, driving sales and enhancing customer satisfaction. According to the Reserve Bank of Australia, BNPL transaction values reached approximately $19 billion in 2022–23, accounting for 2% of all card purchases. This rapid growth has made BNPL a critical part of the ecommerce landscape but it’s also why regulators have stepped in to ensure these services are used responsibly.
The new regulations aim to balance consumer protection with the flexibility that makes BNPL so popular. For brand owners, understanding these changes is crucial to maintaining a seamless payment experience and avoiding potential disruptions.
Key Changes in the New Regulations
The new regulations, introduced under the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 and the National Consumer Credit Protection Amendment (Low Cost Credit) Regulations 2025, classify BNPL contracts, such as those offered by AfterPay, as “low-cost credit contracts” (LCCCs) under the National Credit Code (NCC). This brings BNPL under a more structured regulatory framework, aligning it with traditional credit products while recognizing its unique benefits.
Here are the main changes:
- Licensing Requirements: BNPL providers must hold an Australian Credit Licence (ACL) and be members of the Australian Financial Complaints Authority (AFCA). This ensures oversight and a clear process for dispute resolution.
- Responsible Lending Obligations: AfterPay must make reasonable inquiries about a customer’s financial situation, including income, expenditure, and existing LCCCs. They must also seek information from credit reporting bodies and assess whether the credit is unsuitable.
- Credit Checks: Starting June 10, 2025, AfterPay conducts credit checks for new customer applications, which may affect approval rates and speed. Existing customers might also face changes, such as account closures or offers for alternative credit products like credit cards.
- Fee Limits: Maximum fees are capped at $200 for the first 12 months, $125 for each subsequent 12-month period, and between $120 and $320 for default fees. Exceeding these limits would reclassify the contract as a standard credit contract.
- Consumer Protections: Customers now have rights similar to those for other credit products, including the ability to make hardship requests if they can’t meet repayments.
- Third-Party Requirement: BNPL contracts must involve a third-party provider like AfterPay, meaning direct merchant financing isn’t covered.
These changes reflect a global trend toward regulating BNPL, as seen in New Zealand’s regulations, which began in September 2024 with a 12-month transition period.
How These Changes Affect Ecommerce Businesses
As a brand owner offering AfterPay, the regulations primarily target BNPL providers, but there are indirect implications for your business:
- Customer Approval Process: The requirement for credit checks and affordability assessments may lead to slower approvals or higher rejection rates for AfterPay accounts. This could impact your conversion rates, particularly for higher-value purchases.
- Customer Support Needs: With new consumer protections, such as hardship requests, you may see an increase in customer inquiries or disputes. Your support team should be prepared to handle these, potentially in coordination with AFCA’s dispute resolution process.
- Compliance Assurance: You need to ensure AfterPay remains compliant with the new regulations to avoid service disruptions. AfterPay’s history of supporting regulation suggests they’re likely prepared, but verifying their ACL status is a smart move.
- Customer Behavior: Fee caps may make customers more cautious about late payments, potentially reducing chargebacks or disputes related to fees.
Importantly, the regulations don’t impose direct obligations on merchants. Your role is to maintain a smooth integration with AfterPay’s systems and support customers under the new framework.
Table: Summary of Key Regulatory Changes and Impacts
| Aspect | Details | Impact on Brand Owners |
|---|---|---|
| Effective Date | June 10, 2025 | Ensure AfterPay compliance by this date |
| Classification | BNPL as LCCCs under NCC | Indirect, via AfterPay’s operations. |
| Licensing | Must hold ACL, join AFCA | Verify AfterPay’s compliance to avoid disruptions. |
| Responsible Lending | Modified obligations, credit checks, affordability assessments | Potential slower approvals, affecting conversions. |
| Fee Limits | $200 first 12 months, $125 thereafter, $120–$320 defaults | Customers may be more cautious, fewer disputes. |
| Consumer Protections | Hardship requests, dispute resolution via AFCA | Increased support needs for customer disputes. |
| Third-Party Requirement | Must involve third-party provider (e.g., AfterPay) | No direct impact, ensures AfterPay’s role. |
Practical Steps for Ecommerce Businesses
To navigate these changes effectively, here are five actionable steps:
- Monitor AfterPay’s Updates:
- Regularly check AfterPay’s help center and newsroom for announcements about service changes or integration updates. Be prepared for potential platform adjustments during the transition period.
- Prepare Your Customer Support:
- Train your team to handle inquiries related to the new regulations, such as hardship requests or account closures. Update your support policies to align with AFCA’s dispute resolution processes.
- Communicate with Your Customers:
- Transparency builds trust. Inform customers about their new rights, such as hardship assistance, through your checkout process or payment options page. This can enhance customer confidence and reduce friction.
- Stay Informed:
- Follow updates from the Australian Treasury and ASIC for any further clarifications or adjustments to the regulations. Staying proactive keeps you ahead of the curve.
Final thoughts
The new BNPL regulations in Australia, effective June 10, 2025, mark a significant step toward a safer and more transparent lending environment. While they require some adjustments, they ultimately benefit both consumers and businesses by fostering trust in BNPL services. By verifying AfterPay’s compliance, monitoring updates, and preparing your operations, you can continue to leverage AfterPay effectively, ensuring a positive experience for your customers.
At Ecommerceboost.io, we’re committed to helping you navigate the evolving ecommerce landscape. Whether it’s adapting to new payment regulations or optimizing your sales strategy, our expertise are trusted by over 300 brands and can help your business thrive. Stay informed, stay proactive, and keep boosting your ecommerce success!
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Note: This blog post is based on official government announcements, regulatory updates, and AfterPay’s communications as of June 11, 2025. Always refer to the latest updates from official sources for the most current information.
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