Payday Loans Now Show on Credit Reports Under New BNPL Rules

Australia’s updated credit reporting rules are placing payday loans and Buy Now Pay Later accounts under a unified regulatory framework for the first time. The reform is reshaping how millions of Australians are assessed for future creditworthiness.

From June 2025, BNPL accounts began appearing on credit files alongside payday loans and other regulated credit products, affecting an estimated seven million account holders. The change represents the most significant overhaul of consumer credit reporting since enhanced oversight was introduced for payday lending in 2013, with lenders now gaining a fuller view of borrowers’ financial commitments.

Regulatory Framework Brings BNPL into Formal Credit System

The Treasury Laws Amendment Act 2024 established a fresh regulatory category called “low cost credit contracts.” This framework now encompasses BNPL services under comprehensive lending obligations.

BNPL providers must now obtain Australian Credit Licences from ASIC. They also need to participate in credit reporting systems and comply with responsible lending requirements.

This regulatory convergence addresses longstanding concerns about consumer protection gaps. While BNPL marketed itself as distinct from conventional credit, the underlying mechanics involved deferred payment arrangements that functioned as credit facilities.

According to Loan Owl, a specialist in alternative lending solutions, this alignment creates consistent consumer protections across short-term credit products. Both BNPL and payday loans now sit within the broader consumer credit protection framework.

Market data from Finder reveals that 41% of Australians used BNPL services in the six months before September 2024. Adoption rates among younger demographics reach 59% for both Gen Z and Millennial users. The Australian BNPL market currently stands at $19.50 billion with projections indicating growth to $42.23 billion by 2030.

How BNPL Compares to Payday Loan Regulation

Payday loans have operated under strict regulatory controls since 2013. These regulations impose interest rate caps of 48% annually and limit establishment fees to 20% of the loan amount.

The BNPL regulatory framework draws directly from lessons learned in payday lending oversight. Both sectors now share key compliance requirements including credit licence obligations and mandatory AFCA membership for dispute resolution.

The primary distinction remains that BNPL typically operates without interest charges. Instead, these services rely on merchant fees and late payment penalties for revenue.

Research from the University of New South Wales Law Journal in 2024 found that approximately 20% of BNPL users with multiple accounts reported experiencing two or more financial stress indicators. These rates proved comparable to those observed among payday loan borrowers.

Credit Reporting Changes Under the New System

BNPL providers now conduct credit checks on applications and spending limit increases. These credit enquiries appear on consumer credit files for five years and may temporarily reduce credit scores.

The credit reporting obligation becomes mandatory for BNPL contracts exceeding $2,000 in value. Payment defaults after 14 days and serious defaults exceeding 60 days for debts above $150 now appear on credit files.

Experian data from June 2025 indicates limited consumer awareness of these changes. Only 18% of BNPL users correctly identified credit checks as part of the regulatory requirements. More than half remained unaware of any regulatory modifications.

Current credit reporting practices focus predominantly on negative information. Positive repayment history receives minimal reporting coverage. This creates an asymmetric risk profile where consumers receive little credit benefit for responsible usage but face substantial penalties for payment difficulties.

Impact on Credit Scores and Borrowing Capacity

Analysis of Experian credit bureau data reveals average credit scores for Afterpay customers stand at 743. This positions them between credit card applicants at 771 and personal loan applicants at 646.

Multiple BNPL applications within short timeframes generate numerous credit enquiries. Financial institutions increasingly scrutinise BNPL commitments during credit assessments, particularly for significant lending decisions such as mortgage applications.

Mortgage Application Considerations

Mortgage lenders now incorporate BNPL commitments into serviceability calculations. Industry data indicates one in five BNPL users received advice to close accounts when applying for home loans.

Lenders access complete BNPL histories through credit reporting systems. This includes repayment patterns and default records. Outstanding BNPL balances reduce assessed borrowing capacity while available but unused credit limits represent potential future commitments.

Analysis from Loan Owl suggests consumers seeking home loans should review their BNPL usage patterns months before formal applications. Closing inactive accounts and reducing credit limits can improve serviceability assessments.

Demographic Patterns and Financial Vulnerability

BNPL usage concentrates heavily among Gen Z and Millennials who comprise the dominant user base. These demographics typically occupy early career stages and face housing affordability challenges while building credit histories.

Average BNPL debt declined from $1,391 in July 2023 to $964 in September 2024. However, late fee payment rates increased from 5% in 2020 to 7% in recent measurements.

Research indicates 16% to 25% of BNPL users reduce spending on essential items to meet repayment obligations. Users maintaining three or more BNPL accounts face double the likelihood of accessing additional credit compared to single-account users.

Women and First Nations communities experience disproportionate impacts from BNPL-related financial stress. Studies show women more frequently utilise BNPL for essential purchases during periods of economic hardship.

Credit literacy gaps present additional concerns. Only 32% of BNPL users demonstrate understanding of credit score mechanics. Just 28% checked their credit scores within the preceding 12 months.

Practical Strategies for Managing BNPL Accounts

Financial counsellors recommend several approaches for managing BNPL accounts under the revised regulatory framework:

Account Management Steps:

1. Compile a comprehensive list of all active BNPL accounts across providers
2. Calculate aggregate outstanding balances and payment schedules
3. Close dormant accounts to reduce available credit exposure
4. Establish automatic payments to prevent late fee accrual

Credit Monitoring Practices:

Every year, Australians are entitled to one free credit report from each of the three major credit bureaus: Illion, Experian, and Equifax. BNPL inquiries and possible problems that need to be resolved are found through routine credit report assessments. Correcting errors as soon as possible avoids problems with subsequent credit applications. This proactive strategy supports the upkeep of sound credit profiles.

Support Resources Available:

The regulatory framework mandates BNPL providers offer financial hardship assistance. The Australian Financial Complaints Authority provides free dispute resolution services for BNPL-related complaints. Additional support channels include:

• National Debt Helpline: 1800 007 007
• CreditSmart.org.au for credit education resources
• Financial Counselling Australia for confidential guidance
• AFCA BNPL disputes: 1800 931 678

Seeking assistance represents prudent financial management rather than personal failure. Professional financial counsellors provide confidential support for navigating credit challenges without judgment.

Future Regulatory Developments

Treasury’s ongoing review of Australia’s credit reporting framework may extend further requirements to BNPL providers. Potential developments include mandatory comprehensive credit reporting and alignment of fee structures with payday loan caps.

ASIC keeps a close eye on BNPL providers’ adherence to their responsibilities for responsible lending. Increased monitoring throughout alternative credit sectors is indicated by recent regulatory warnings to payday lenders trying to steer vulnerable individuals toward less regulated products.

The regulatory convergence of traditional credit products and BNPLs is indicative of changing policy attitudes to innovation in digital finance. Regulatory frameworks will probably change as payment technologies advance in order to protect consumers and promote positive financial innovation.

Key Takeaways for Consumers

Australia’s BNPL landscape is drastically changed by the regulation amendments in June 2025. These services are currently subject to the same regulations as traditional credit products and payday loans.

Understanding the effects of credit reporting becomes crucial for safeguarding the financial well-being of the seven million Australians who have BNPL accounts. Customers should routinely check credit reports and aggressively examine BNPL consumption trends.

Important consumer protections are established by the regulatory framework. Effective credit management, however, necessitates making well-informed decisions and appropriately requesting assistance when difficulties emerge.

Keeping up with regulatory developments is essential for successfully navigating Australia’s credit landscape as financial services continue to evolve. Significant advancements in all-encompassing consumer protection across all credit product categories are represented by the convergence of BNPL and payday loan regulation.

The transformation of Australia’s credit reporting system creates both challenges and opportunities. By staying informed and managing accounts responsibly, consumers can maintain strong credit profiles while benefiting from innovative payment solutions.