Australia’s government moved to regulate buy now, pay later finance firms under credit laws, drawing the line on a months-long process aimed at tightening requirements on the maturing industry.
Firms will need to adhere to responsible lending obligations and hold Australian credit licenses, according to Stephen Jones, the nation’s minister for financial services. They’ll also face a range of minimum standards on conduct and products.
Buy now, pay later has “provided a valuable source of competitive pressure on traditional credit products, such as credit cards or payday loans,” he said in text of a speech Monday. “But with those opportunities have come new and growing dangers to consumers, which up until now have been largely unregulated and unchecked.”
The new laws will impact consumer credit firms from Zip Co. to Afterpay Ltd., which compete with banks to provide interest-free credit that’s typically repaid in installments. It’s an industry that boomed during the pandemic but has struggled in recent months amid soaring interest rates and the threat of stricter regulation.
The plans outlined Monday will now involve industry consultation on the detail, Jones said. They will bring the industry “into line with other regulated credit providers, simplifying our regulatory system and addressing concerns about competitive neutrality,” Jones said.
