Afterpay, the dominant force in Australia’s buy now, pay later (BNPL) landscape, is entering a new chapter as sweeping regulatory reforms come into effect from June 10, 2025. The changes mark a pivotal shift for the industry, with Afterpay and other BNPL providers now required to comply with the same credit standards as traditional lenders, including banks and credit card issuers.
Nick Molnar, co-founder of Afterpay, believes these reforms will offer the legitimacy the sector needs to thrive—and potentially expand into new markets like supermarkets. “I believe it provides the legitimacy the buy now, pay later market needs and the ability for us to scale well into the future,” he said.
Nick Molnar, Afterpay’s co-founder, believes that new regulations will legitimise the BNPL sector, enabling it to compete with credit cards for everyday purchases. [Credit: Dominic Lorrimer]
What the New Laws Mean for Afterpay and Consumers
From this week, Afterpay must ask new users and those requesting higher credit limits for details about their income and expenses. The goal is to ensure credit products are appropriate for each customer’s financial situation. These mandatory checks are similar to those required for credit card and personal loan applications, bringing the BNPL sector under tighter scrutiny from the Australian Securities and Investments Commission (ASIC).
Until now, BNPL products like Afterpay, Zip, and Humm have existed in a regulatory grey area. Their popularity skyrocketed during the cost-of-living crisis as Australians sought flexible payment options. However, critics—including major banks—have long argued that these services should be subject to credit laws due to the financial risks they pose, particularly to younger users.
Now that these services are regulated under the Credit Act, BNPL providers are required to hold an Australian credit licence and conduct more robust checks before approving applications.
In recent years, many Australians have turned to BNPL services to help manage expenses during the cost-of-living crisis. [Credit: Rafael Ben-Ari via Getty Images]
Supermarkets May Soon Accept Afterpay at Checkout
According to Molnar, one of the most significant impacts of this new regulatory framework is the potential for Afterpay to be used for more everyday purchases, including groceries.
“Some of the biggest industries in [Australia] have been holding out to offer Afterpay until a date that we are regulated. We are now starting to scale into more everyday spend,” Molnar explained.
So far, large grocery chains like Coles and Woolworths have avoided integrating Afterpay at checkout, primarily due to concerns about fees and the lack of regulation. Now, with the legal framework in place, that reluctance may start to shift.
Credit Score Implications for Afterpay Users
As part of the new changes, Afterpay will begin conducting credit checks using Experian, a global credit reporting agency. These checks will appear on credit reports, potentially raising concerns among consumers worried about how it could affect their chances of securing home loans or credit cards in the future.
While Michael Saadat, Block’s head of public policy, reassured users that “in isolation, they won’t affect [the] Experian credit score”, the cumulative effect of multiple credit applications and outstanding debts may still raise red flags for traditional lenders.
A joint report by Experian and Afterpay revealed that the average Afterpay user has a credit score of 743, which is only slightly below the average credit card applicant at 771. However, home loan applicants generally average a much higher score of 1016.
Regulation May Bring More Players to the Market
The regulatory changes could open the floodgates for new entrants. Diane Tate, CEO of the Australian Finance Industry Association, said, “We will see market expansion and new product offerings, as BNPL becomes more embedded.”
She expects the regulations to also drive traditional credit providers, including major banks, further into the BNPL space. In fact, Commonwealth Bank already offers its own BNPL product, StepPay, and other lenders may soon follow.
From Boom to Reform: Afterpay’s Growth Story
Founded a decade ago, Afterpay grew rapidly by offering interest-free loans with flexible repayment terms. Its growth culminated in a $39 billion acquisition by Block Inc. in 2021. In 2024 alone, Afterpay processed $50 billion in sales across Australia and the United States—up from $21 billion in 2021.
Today, the platform serves over 24 million customers and is available at 348,000 merchants globally.
Block’s most recent financial report showed Afterpay generating $US237 million in gross profit in Q1 2025, up 14% year-on-year. Its loss rate has also improved, dropping to just 0.67% of sales.
Most BNPL users are young Australians. [NewsWire / Gaye Gerard]
What This Means for You
The new rules are a double-edged sword for Afterpay users. On one hand, they’ll enjoy greater protections and clearer insights into their financial behaviour. On the other, missed repayments or multiple applications could negatively impact credit scores.
Experts urge consumers to make repayments on time and limit the number of credit applications. Elsa Markula, CEO of CreditSmart, advised: “Only take on credit – including BNPL – you can comfortably repay.”
Consumers are also encouraged to regularly check their credit reports with agencies like Experian, Equifax, and illion to ensure accuracy.
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Conclusion
For Afterpay, these regulatory changes represent a “turning point”, as Molnar described. As the service evolves from a disruptive fintech to a regulated financial product, the company is poised to expand further into mainstream spending habits—potentially including your weekly grocery shop.
But with added visibility comes added responsibility. For users, staying informed and managing repayments has never been more important. As BNPL continues to grow and mature, it’s up to both providers and consumers to navigate this new financial landscape wisely.
