As anticipated, the new Commonwealth Government has indicated there will be regulation of the Buy Now Pay Later (‘BNPL’) industry.  In an announcement made last week, the new financial services minister, Stephen Jones, telegraphed the much anticipated and expected news.

Buy Now Pay Later (‘BNPL’) is a system of advancing funds to consumers for the purchase of goods and services, with repayments made in regular instalments. The consumer can take possession of the goods or services immediately.

Currently, BNPL advances are unregulated by consumer credit law, as no interest is charged on the advances. 

The National Consumer Credit Protection Act 2009 does not apply, and providers of BNPL finance are not required to meet the compliance requirements of that legislation.

Finance providers obtain a return on BNPL transactions via the collection of merchant fees (paid by vendors to the finance provider at the time of sale) and by recovery of fixed late fees by consumers if they default on their repayment schedule.

The current landscape of regulation in respect of digital payments within Australia is set to change significantly within the coming 12-18 months.  

Part of this change is the prospect of greater codification and regulation of the legal management of the varying types of payment systems - including Buy Now Pay Later (‘BNPL’), cryptocurrency, and mobile telephones; as well as traditional systems such as credit cards and eftpos.