The Australian Government has passed major reforms for Buy Now Pay Later (BNPL) services, bringing them under the National Credit Consumer Protection Act (NCCP).

Here’s what you need to know:

What’s changed?

• BNPL services are now classified as Low-Cost Credit Contracts (LCCCs).
• Providers will be subject to the same licensing requirements as other credit providers, which means you must apply for an Australian Credit License (ACL) if you haven’t already.
  •Existing ACL holders may need to amend their licenses to cover BNPL activities.

Key Compliance Obligations:

Responsible Lending: Providers must adopt responsible lending practices, either by following the existing framework or opting into a modified one with less stringent requirements.

• Conduct Requirements: You’ll need to:
• Act efficiently, honestly, and fairly.
• Maintain risk management and dispute resolution systems.
• Ensure customer protection and compliance with NCCP provisions.

These changes will impact all BNPL providers, so it’s crucial to assess your licensing and compliance frameworks to ensure you’re ready.