Is Australia’s Buy Now Pay Later boom at an end?

The boom in Australia's Buy Now Pay Later (BNPL) sector appears to be coming to an end. Afterpay, a key player in the market, has never turned a profit in the country. It recently spent millions to secure the naming rights at a Sydney Olympic Park arena, marking the first venue where Australians can "buy now, pay later" for event tickets, merchandise, and even alcohol. Despite this, BNPL spending in Australia grew $3 billion annually in the late 2010s but slowed to just $1.5 billion in 2025, according to the Reserve Bank.

While the rise of BNPL was initially hailed as a potential replacement for credit cards, Australians spent 20 times more via credit cards last year than through BNPL products ($22 billion). Eight BNPL platforms have left the Australian market since 2022, leaving only four major operators: PayPal, Klarna, Zip, and Afterpay. Afterpay and Klarna claim growth, while PayPal's Pay-in-4 service has not seen any growth since 2023, and Zip has experienced a 7% year-on-year fall in users. Zip is set to leave the New Zealand market as well.

Equifax's research indicates that new BNPL account applications in the three months leading up to June 2026 were down 35% from the previous year. The slowdown in BNPL growth is partly attributed to reforms introduced in 2025 aimed at preventing companies from approving customers for funds they couldn't afford to repay. These reforms defined BNPL as a form of credit, forcing companies to conduct credit checks and report new accounts to credit agencies, which may affect future activities like mortgage applications.

Kevin James, an analyst at Equifax, attributes the slowdown to the regulatory changes, which have eliminated instant approvals that were a key selling point for BNPL platforms. Some customers have turned to other forms of lending, such as credit cards and personal loans, in response to the stricter regulations. BNPL providers have struggled to attract new businesses due to the rising cost of living, as merchants prefer the lower fees associated with credit card transactions.

The industry may continue to grow slowly, but experts believe that the remaining operators will have to abandon the fee-free, interest-free model by adding fees or introducing new products to maintain revenue from a stagnant user base.