The buy now pay later boom in Australia is showing clear signs of cooling as growth slows, regulations tighten, and major players exit the market. Once hailed as the future of consumer credit, BNPL platforms now face a pivotal moment that will reshape the industry.
BNPL Growth Slows Across Australia
According to the Reserve Bank of Australia, yearly spending through BNPL platforms grew by $3 billion annually in the late 2010s, but that figure has dropped to just $1.5 billion in 2025. This marks a significant deceleration for a sector that promised to replace traditional credit cards.
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Despite the hype, Australians still spent 20 times more via credit cards last year—$22 billion compared to just over $1 billion through BNPL. The gap highlights that BNPL remains a niche product rather than a mainstream replacement.
Market Consolidation and Departures
At least eight BNPL platforms have left Australia since 2022, including National Australia Bank withdrawing its product earlier this year. The market now has four major operators: PayPal, Klarna, Zip, and Afterpay. Afterpay leads with 4.5 million customers, while PayPal, Klarna, and Zip each have around 2 million.
Growth is uneven. Afterpay and Klarna report expansion, but PayPal's Pay-in-4 service has seen no customer growth since 2023, and Zip experienced a 7% year-on-year decline in users. Zip is also exiting the New Zealand market, signaling further contraction.
New Credit Laws Reshape BNPL
The slowdown is largely attributed to 2025 reforms that classified BNPL as a form of credit. These laws require platforms to perform credit checks and report new accounts to credit agencies, which can affect customers' future mortgage applications. The reforms ended instant approvals, a key appeal of BNPL.
Equifax data shows new BNPL account applications in the three months to June 2026 were down 35% from the previous year. Kevin James, an analyst at Equifax, notes that the reforms have stripped away the convenience that made BNPL attractive.
Afterpay's Arena Gamble
In a bold move, Afterpay spent millions to take over naming rights for a Sydney Olympic Park arena, rebranding it as Afterpay Arena. The company aims to let Australians "buy now, pay later" for event tickets, merchandise, dinner, and even alcohol. This diversification is a strategic attempt to maintain relevance amid slowing core growth.
However, the arena deal also highlights the pressure BNPL companies face to find new revenue streams as traditional lending models tighten.
Comparison: BNPL vs. Credit Cards in Australia
| Metric | BNPL | Credit Cards |
|---|---|---|
| Annual spending (2025) | $1.5B growth | $22B total |
| Market players | 4 major operators | Multiple banks |
| Credit checks | Now required | Always required |
| Customer growth | Mixed | Stable |
Key Takeaways for Consumers and Investors
- BNPL growth has halved from $3B to $1.5B annually, signaling market maturity.
- New credit laws have reduced new account applications by 35%.
- Afterpay remains dominant but faces profitability challenges.
- Consumers should consider credit score impacts before using BNPL.
- Investors should watch for further market exits and consolidation.
What's Next for Buy Now Pay Later?
The BNPL sector is not dead, but it is evolving. Platforms that adapt to regulatory requirements and offer genuine value—like Afterpay's arena integration—may survive. Others may follow Zip's path and exit weaker markets.
For consumers, the message is clear: BNPL is now treated like credit, so use it responsibly. For the industry, the boom phase is over, replaced by a more sustainable but less explosive growth trajectory.
FAQ
Is buy now pay later still popular in Australia?
BNPL remains popular with millions of users, but growth has slowed significantly. New account applications dropped 35% year-on-year, and spending growth halved to $1.5 billion in 2025.
How have new laws affected BNPL providers?
Laws passed in 2025 classify BNPL as credit, requiring credit checks and reporting to agencies. This has ended instant approvals, reducing the convenience that drove adoption.
Which BNPL platforms are still operating in Australia?
The four major operators are Afterpay, PayPal, Klarna, and Zip. Afterpay leads with 4.5 million customers, while the others have around 2 million each.
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