Pitfalls, Protections and Official Sources
Buy now pay later vs credit card in 2026: what changed from 10 June 2025
How buy now pay later compares with a credit card in Australia since BNPL became regulated credit on 10 June 2025: costs, surcharges, rewards, disputes and credit reporting.
Since 10 June 2025, buy now pay later (BNPL) in Australia is regulated as consumer credit: providers need an Australian credit licence, must meet modified responsible lending obligations, be members of AFCA and follow hardship and dispute rules, under the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024. For a shopper choosing between BNPL and a credit card, the trade-off is now mainly about cost and habits: BNPL usually charges no interest but can charge late fees and sometimes account fees, while a credit card charges no interest only if you pay the full closing balance and may earn rewards. The RBA's removal of card surcharges from 1 October 2026 covers eftpos, Mastercard and Visa, but not BNPL services, which the RBA is examining in its separate Review of Payments System Regulation (Issues Paper of 25 June 2026; priorities due by the end of 2026).
This guide belongs to the pitfalls, protections and official sources section. Fees and rates are illustrative. General information, not financial advice.
BNPL and credit cards side by side
| Feature | Typical BNPL | Credit card |
|---|---|---|
| How you repay | Fixed instalments, often four over about six to eight weeks | Monthly statement; pay in full or at least the minimum |
| Interest | Usually none on standard plans | Charged on unpaid balances, often around 20% a year on rewards cards (illustrative) |
| Fees | Late fees, sometimes account or plan fees | Annual fee, late fee, cash advance and foreign transaction fees |
| Rewards | Usually none, or provider-specific offers | Cashback or points on eligible purchases |
| Legal status since 10 June 2025 | Regulated credit; many plans are low cost credit contracts with modified obligations | Regulated credit card contract with card-specific rules |
| Merchant surcharge | Not covered by the RBA's 1 October 2026 card surcharge removal | Removed on eftpos, Mastercard and Visa from 1 October 2026 |
| Disputes | Provider's internal dispute process, then AFCA | Issuer dispute process, chargebacks under scheme rules, then AFCA |
| Credit report | Accounts and repayments can be reported | Account, limit and repayment history reported |
What the 2025 BNPL rules require
In broad terms, from 10 June 2025:
- BNPL providers must hold an Australian credit licence and comply with general conduct obligations, including being efficient, honest and fair.
- They must assess whether a BNPL contract would be unsuitable before providing it or increasing a limit. For low-cost BNPL contracts within a threshold, this is a modified, scalable assessment, and providers must have a written unsuitability assessment policy.
- They must be members of AFCA and have internal dispute resolution.
- Hardship provisions of the National Credit Code apply.
- Fees on low cost credit contracts are restricted; contracts that exceed the limits lose low-cost status and must meet the full rules.
ASIC's Regulatory Guide 281 explains how the modified obligations apply. Check ASIC for any updates.
Cost comparison: a $600 purchase (illustrative)
BNPL, paid on time: four instalments of $150, no interest, no fees. Cost: $0.
BNPL, two instalments late: two late fees of, say, $10 each. Cost: $20. Some providers cap total late fees per order.
Rewards credit card, paid in full: no interest. Points on $600 at 1 point per dollar valued at 0.8c: gain of about $4.80, against an annual fee you pay anyway.
Rewards credit card, carried for three months at 20.99%: interest about $600 × 20.99% × 3 ÷ 12 ≈ $31.49, minus $4.80 in points: net cost about $27.
Either can be free or costly depending on behaviour. The risk with BNPL is spreading many small plans across several providers; the risk with a credit card is a revolving balance.
Using BNPL with a credit card
Some BNPL services let you link a credit card to pay instalments. That combines the risks:
- You may pay BNPL fees and card interest on the same purchase.
- Some providers or card issuers restrict or treat such payments differently.
- Instalments from a linked card usually earn no special BNPL benefit and may not earn card points if the issuer excludes them.
A debit card linked to BNPL keeps the purchase from becoming card debt, but check for late fees if the account has insufficient funds.
How BNPL affects card applications
Card issuers and other lenders consider BNPL accounts as existing commitments when assessing new credit, and BNPL accounts and repayments can appear on credit reports. Several BNPL accounts open at once can reduce what a card issuer will offer. See how card limits are assessed and credit cards and your credit report.
Choosing between them for a purchase
- If you will pay in full within the month and the merchant takes cards without a surcharge, a rewards or no-fee credit card is usually simplest and may earn points.
- If you need to spread a small purchase over a few weeks and are sure you can meet every instalment, BNPL can cost nothing.
- If you are already carrying card debt or several BNPL plans, pause. Make a list of all repayments and talk to the National Debt Helpline (1800 007 007).
Frequently asked questions
Can a merchant still surcharge me for BNPL after 1 October 2026?
The RBA's surcharge removal applies to eftpos, Mastercard and Visa card payments. BNPL is outside it, and merchants' practices for other payment methods are covered by consumer law on pricing. Check the RBA's FAQ and the ACCC.
Is BNPL hardship available?
Yes. Since BNPL is regulated credit, you can ask the provider for a hardship variation under the National Credit Code.
Do BNPL late payments affect my credit score?
They can be reported as repayment history and, if serious, as defaults, like other consumer credit.
Does BNPL earn rewards?
Some providers run their own offers, but BNPL generally does not earn card-style points.
Sources and where to check
- ASIC — buy now pay later regulation and Regulatory Guide 281
- ASIC Moneysmart — buy now pay later
- Reserve Bank of Australia — surcharging decision and the Review of Payments System Regulation (June 2026) covering BNPL and other payment providers
- Australian Financial Complaints Authority — complaints about BNPL providers and card issuers
- National Debt Helpline — free financial counselling, 1800 007 007
