Offering Buy Now Pay Later at an Online Checkout
Buy now pay later is a familiar sight at online checkouts. The customer takes the goods now and pays the provider over time. The store is paid by the provider rather than waiting on the instalments. For many sellers it looks like a simple add on.
The rules around these products changed in 2025, and that is worth understanding before you switch one on. The new licensing rules are aimed at the providers rather than the shops. Even so, the way you choose a provider and describe it on your site still matters. Here is what an online business owner should know.
How a buy now pay later arrangement works
ASIC describes the basic structure in three parts. The merchant supplies the goods or services. The buy now pay later provider pays the merchant. The provider then has its own contract with the consumer for the repayments.
So the debt sits between your customer and the provider. Your part of the deal is the sale itself and the agreement you sign with the provider. That agreement sets out how and when you are paid and what you are charged. Read it closely, because it shapes your margins on every order that uses it.
What changed in June 2025
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 amended the National Credit Act. It extended the National Credit Code to buy now pay later contracts. ASIC says these contracts are now captured by the definition of a credit contract under the Code. The key start date was 10 June 2025.
From that date, anyone engaging in credit activities involving these contracts must hold an Australian credit licence. Providers without a licence had to apply by 10 June 2025 and have ASIC accept the application for lodgement to keep operating while ASIC decided it. They also had to become members of the Australian Financial Complaints Authority. ASIC explains the details on its buy now pay later credit licensing page.
The reforms also created a new category called low cost credit contracts. Providers of these contracts can choose to follow modified responsible lending obligations. In May 2025, ASIC released Regulatory Guide 281 on low cost credit contracts to help providers comply. The ASIC Commissioner described the reforms as an important step to improve protection for consumers who use these products.
Choosing a provider for your store
Because the providers are now licensed credit businesses, it makes sense to check who you are dealing with. Ask any provider to confirm it holds an Australian credit licence. Ask how it handles customer complaints and hardship requests. A provider that answers these questions clearly is easier to work with when something goes wrong.
Next, look hard at the merchant agreement. Check the fees you pay on each sale and how quickly money lands in your account. Find out what happens when an order is refunded or returned. Look for any minimum terms or exit fees too, so you know how to leave if it does not suit you.
Think about the technical side as well. Most providers connect to a store through a plugin or a payment gateway. Every extra plugin is one more thing to update and watch, so keep these WordPress security vulnerabilities in mind when you add one. Install only the official plugin from the provider, and keep it current.
Refunds and returns
Refunds work a little differently when a third party holds the repayments. Ask the provider how refunds flow through its system and how it adjusts what the customer owes. Make sure your staff know the exact steps in your store system. A slow or confused refund is a common reason for a second complaint.
Offering this payment option does not change your duties as a seller. Your returns process should still be fair and match what your website promises. Keep a record of each refund and the date you processed it. That record helps if a customer later says the money never came through.
Presenting it honestly on your website
How you show the option on your site matters as much as the deal behind it. Keep the wording plain and accurate. Avoid suggesting the product is free or that paying later has no downside. The ADF Financial Services Consumer Centre notes that late fees can apply if payments are missed and can be steep compared with the purchase price.
Placement is worth some thought. Small badges near the price can help a shopper make a decision. Too many logos and pop ups can clutter the page and distract from the product itself. These web design failings that reduce leads are a good reminder that a clean checkout usually beats a busy one.
Think about the people who search for payment options before they buy. Some want to know straight away which providers you accept. Answering that clearly on product and checkout pages matches their search intent and saves them a click. A short payment options page can cover the details in one place.
Promoting payment options in your marketing
Some stores mention buy now pay later in emails and ads. If you do, keep it in proportion with the rest of your message. Lead with the product and its value, then mention payment choices as a convenience. That fits a sensible approach to digital marketing where trust comes first.
Be careful not to push customers who may struggle to repay. Encouraging people to spend beyond their means can damage your name and lead to unhappy buyers. A light touch protects both your customers and your business. Customers who feel well treated are more likely to come back.
Weighing it up for your business
There is no single right answer for every online store. Look at your average order value and the kinds of products you sell. Compare the fees against any change in sales once you have a few months of data. If the numbers do not add up, you can review the arrangement under the terms of your agreement.
Keep an eye on official updates from ASIC, since guidance can change over time. Read any notice your provider sends about changes to its terms. Revisit your website wording if the provider changes how it works. Small checks like these keep your checkout accurate and your customers informed.
Frequently asked questions
Do I need a credit licence to offer buy now pay later?
The licensing rules apply to anyone engaging in credit activities involving these contracts, such as the providers. ASIC’s licensing page does not set out separate licence obligations for merchants. If you are unsure how the rules apply to your setup, get advice from a qualified lawyer.
When did the new rules start?
The reforms commenced on 10 June 2025. From that date, buy now pay later contracts fall under the National Credit Code. Providers need an Australian credit licence to keep offering them.
Where can a customer complain about a provider?
Providers had to become members of the Australian Financial Complaints Authority to keep operating. That gives customers an external body to complain to about a provider. For problems with the goods themselves, your own complaints process still applies.
This article is general information only and is not legal or financial advice. Credit laws and ASIC guidance can change, and other consumer rules can differ between states and territories. Speak with a qualified lawyer or adviser about your own business.
Buy now pay later is a familiar sight at online checkouts. The customer takes the goods now and pays the provider over time. The store is paid by the provider rather than waiting on the instalments. For many sellers it looks like a simple add on.
The rules around these products changed in 2025, and that is worth understanding before you switch one on. The new licensing rules are aimed at the providers rather than the shops. Even so, the way you choose a provider and describe it on your site still matters. Here is what an online business owner should know.
How a buy now pay later arrangement works
ASIC describes the basic structure in three parts. The merchant supplies the goods or services. The buy now pay later provider pays the merchant. The provider then has its own contract with the consumer for the repayments.
So the debt sits between your customer and the provider. Your part of the deal is the sale itself and the agreement you sign with the provider. That agreement sets out how and when you are paid and what you are charged. Read it closely, because it shapes your margins on every order that uses it.
What changed in June 2025
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 amended the National Credit Act. It extended the National Credit Code to buy now pay later contracts. ASIC says these contracts are now captured by the definition of a credit contract under the Code. The key start date was 10 June 2025.
From that date, anyone engaging in credit activities involving these contracts must hold an Australian credit licence. Providers without a licence had to apply by 10 June 2025 and have ASIC accept the application for lodgement to keep operating while ASIC decided it. They also had to become members of the Australian Financial Complaints Authority. ASIC explains the details on its buy now pay later credit licensing page.
The reforms also created a new category called low cost credit contracts. Providers of these contracts can choose to follow modified responsible lending obligations. In May 2025, ASIC released Regulatory Guide 281 on low cost credit contracts to help providers comply. The ASIC Commissioner described the reforms as an important step to improve protection for consumers who use these products.
Choosing a provider for your store
Because the providers are now licensed credit businesses, it makes sense to check who you are dealing with. Ask any provider to confirm it holds an Australian credit licence. Ask how it handles customer complaints and hardship requests. A provider that answers these questions clearly is easier to work with when something goes wrong.
Next, look hard at the merchant agreement. Check the fees you pay on each sale and how quickly money lands in your account. Find out what happens when an order is refunded or returned. Look for any minimum terms or exit fees too, so you know how to leave if it does not suit you.
Think about the technical side as well. Most providers connect to a store through a plugin or a payment gateway. Every extra plugin is one more thing to update and watch, so keep these WordPress security vulnerabilities in mind when you add one. Install only the official plugin from the provider, and keep it current.
Refunds and returns
Refunds work a little differently when a third party holds the repayments. Ask the provider how refunds flow through its system and how it adjusts what the customer owes. Make sure your staff know the exact steps in your store system. A slow or confused refund is a common reason for a second complaint.
Offering this payment option does not change your duties as a seller. Your returns process should still be fair and match what your website promises. Keep a record of each refund and the date you processed it. That record helps if a customer later says the money never came through.
Presenting it honestly on your website
How you show the option on your site matters as much as the deal behind it. Keep the wording plain and accurate. Avoid suggesting the product is free or that paying later has no downside. The ADF Financial Services Consumer Centre notes that late fees can apply if payments are missed and can be steep compared with the purchase price.
Placement is worth some thought. Small badges near the price can help a shopper make a decision. Too many logos and pop ups can clutter the page and distract from the product itself. These web design failings that reduce leads are a good reminder that a clean checkout usually beats a busy one.
Think about the people who search for payment options before they buy. Some want to know straight away which providers you accept. Answering that clearly on product and checkout pages matches their search intent and saves them a click. A short payment options page can cover the details in one place.
Promoting payment options in your marketing
Some stores mention buy now pay later in emails and ads. If you do, keep it in proportion with the rest of your message. Lead with the product and its value, then mention payment choices as a convenience. That fits a sensible approach to digital marketing where trust comes first.
Be careful not to push customers who may struggle to repay. Encouraging people to spend beyond their means can damage your name and lead to unhappy buyers. A light touch protects both your customers and your business. Customers who feel well treated are more likely to come back.
Weighing it up for your business
There is no single right answer for every online store. Look at your average order value and the kinds of products you sell. Compare the fees against any change in sales once you have a few months of data. If the numbers do not add up, you can review the arrangement under the terms of your agreement.
Keep an eye on official updates from ASIC, since guidance can change over time. Read any notice your provider sends about changes to its terms. Revisit your website wording if the provider changes how it works. Small checks like these keep your checkout accurate and your customers informed.
Frequently asked questions
Do I need a credit licence to offer buy now pay later?
The licensing rules apply to anyone engaging in credit activities involving these contracts, such as the providers. ASIC’s licensing page does not set out separate licence obligations for merchants. If you are unsure how the rules apply to your setup, get advice from a qualified lawyer.
When did the new rules start?
The reforms commenced on 10 June 2025. From that date, buy now pay later contracts fall under the National Credit Code. Providers need an Australian credit licence to keep offering them.
Where can a customer complain about a provider?
Providers had to become members of the Australian Financial Complaints Authority to keep operating. That gives customers an external body to complain to about a provider. For problems with the goods themselves, your own complaints process still applies.
This article is general information only and is not legal or financial advice. Credit laws and ASIC guidance can change, and other consumer rules can differ between states and territories. Speak with a qualified lawyer or adviser about your own business.