Australia's Buy Now Pay Later Boom 2026

Australia's Buy Now Pay Later (BNPL) boom may be ending as growth slows sharply and new regulations reshape the sector. Once a disruptor promising to replace credit cards, BNPL platforms now face declining user numbers, stricter credit laws, and shifting consumer behavior.

The Rise and Stalling of BNPL in Australia

In the late 2010s, Australians' annual spending through BNPL platforms grew by $3 billion each year. By 2025, that growth had halved to just $1.5 billion, according to the Reserve Bank. While BNPL initially attracted millions with its instant, interest-free installment plans, the sector's momentum has clearly stalled.

Afterpay, the market leader with 4.5 million customers, has never turned a profit in Australia. Its recent move to rebrand a Sydney arena as "Afterpay Arena" signals an attempt to integrate BNPL into everyday experiences—from event tickets to dinner—but the underlying financials remain challenging.

Key Players and Market Shifts

At least eight BNPL providers have exited Australia since 2022, including National Australia Bank's product. The remaining major operators are PayPal (Pay-in-4), Klarna, Zip, and Afterpay. While Afterpay and Klarna report growth, PayPal's customer base has stagnated since 2023, and Zip saw a 7% year-on-year drop in users.

Zip is also leaving the New Zealand market, and new account applications for BNPL fell 35% in the three months to June 2026 compared to the prior year, per Equifax.

Regulatory Impact: The 2025 Credit Reforms

The slowdown is largely attributed to 2025 laws that classified BNPL as a form of credit. This forced companies to perform credit checks and report new accounts to credit agencies, impacting customers' future mortgage applications. Instant approvals—a core appeal—were eliminated, deterring many users.

Kevin James, an Equifax analyst, notes that the reforms stripped away the unique convenience that set BNPL apart. As a result, some customers have reverted to traditional credit cards, which still dominate with $22 billion in annual spending compared to BNPL's $1.1 billion.

Comparative Data: BNPL vs. Credit Cards

What's Next for BNPL in Australia?

The sector is not dead, but it is maturing. Companies are pivoting to offer more credit-like features, such as longer repayment terms and integration with traditional financial services. However, without the instant-approval edge, BNPL must find new value propositions to retain customers.

Consumers now have more protection, but also fewer options. The future may see consolidation among the four remaining players, with a focus on profitability over growth.

Key Takeaways

• BNPL growth in Australia has slowed dramatically, from $3B annual growth to $1.5B.
• New credit laws in 2025 require BNPL providers to perform credit checks, reducing instant approvals.
• Credit cards still outpace BNPL by 20x in total spending.
• At least eight BNPL providers have left the market since 2022.
• Afterpay, Klarna, PayPal, and Zip are the remaining major players.

FAQ

Best Products We’ve Tested and Rated

Our testing team has hands-on reviews of air fryers, supermarket chocolate ice cream, air purifiers home air, air purifiers air, and air coolers reviewed. Every option below was compared across price, build quality, and real-world performance, with honest pros and cons. We update these guides regularly as new models arrive, so the recommendations stay current.

Our testing team has hands-on reviews of portable coolers camping travel, pickleball equipment beginners paddles balls, summer essentials walking sandals wine coolers, meat thermometers perfect roasts barbecues, and summer camping gear loved july. Every option below was compared across price, build quality, and real-world performance, with honest pros and cons. We update these guides regularly as new models arrive, so the recommendations stay current.