You’ve probably used or at least heard of Buy Now, Pay Later (BNPL) services like Afterpay, Zip and Klarna. They let you buy stuff now and pay for it in chunks over a few weeks. It’s handy because you usually don’t have to pay interest, though there can be late fees if you miss a payment.

But unlike other loans, BNPL services haven’t been regulated like traditional credit options. They’ve been flying under the radar, which has led to some issues. People have raised concerns about things like unaffordable loans, confusing terms, and high late fees. Plus, these services weren’t required to do credit checks, so some users ended up in debt without proper oversight.

To address this, there is a new Bill in Parliament aimed at shaking things up. The proposed laws would bring BNPL services under the existing Credit Act. This means companies like Afterpay would need to get a credit licence and perform basic credit checks on their customers. The idea is to make sure that BNPL plans are affordable and tat people aren’t getting in over their heads.

Assistant Treasurer Stephen Jones has emphasized that the new rules will strike a balance. They’ll set just enough regulations to prevent irresponsible lending without making credit too hard to get. This change aims to protect users from debt spirals while keeping the BNPL industry innovative and competitive.

Here’s what the new regulations will look like:

• Credit Checks: BNPL providers will need to check if their products are affordable for the customer.
• Regulation: BNPL services will be regulated under the Credit Act, meaning they’ll need a credit licence and will follow more rules.
• Consumer Protections: The changes should address issues like late fees and lack of transparency, and make sure BNPL is used responsibly.

The Australian Finance Industry Association (AFIA) is on board with these changes, believing they will enhance trust and protection in the section. Zip, one of the BNPL companies, already meets some of these new standards and supports the move for a level playing field.

However, not everyone thinks the new rules go far enough. Consumer advocates point out that many people are struggling with BNPL debt, using it for essentials like food and bills rather than just shopping sprees. They hope these new regulations will be expanded to better protect those who are most vulnerable.

So, if you’re using BNPL services, keep an eye out for these upcoming changes. They’re designed to make the system fairer and safer for everyone.