Australia Buy Now Pay Later Business and Investment Opportunities Databook - 90+ KPIs on BNPL Market Size, End-Use Sectors, Market Share, Product Analysis, Business Model, Demographics - Q1 2026 Update

Key Trends and Drivers

• Australia has moved BNPL from a largely self-regulated model into the mainstream consumer-credit framework. The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 classifies BNPL as a “low-cost credit contract” under the National Consumer Credit Protection Act and Credit Code. Providers must obtain an Australian credit licence, comply with responsible-lending-style obligations, and meet disclosure, hardship, and dispute-resolution requirements. These reforms begin applying from June 2025, supported by draft BNPL regulations and forthcoming ASIC guidance.
• Regulators and consumer groups have raised concerns about hardship, multiple concurrent BNPL accounts and limited affordability checks. BNPL is now one of the most widely used consumer credit products, especially among younger Australians, prompting the government to close the “credit-law loophole” and align protections with those for credit cards while preserving access to low-cost, short-term credit.
• Compliance costs and licensing requirements will likely consolidate the market around larger, better-capitalised operators such as Afterpay, Zip and bank-owned or bank-funded BNPL offerings. Smaller providers without the scale to meet credit-licensing and data-governance requirements may exit or pivot. Credit checks and hardship obligations will tighten underwriting and reduce loss rates. Still, they may also slow account growth and shift marketing away from aggressive acquisition towards long-term customer value and credit-quality management. ASIC’s 2025 enforcement priorities, which emphasise harms from cost-of-living and high-cost credit, suggest continued scrutiny of BNPL fees, arrears, and hardship handling.

• Major Australian-origin BNPL providers are shifting from “growth at all costs” to sustainable profitability, with Zip the clearest example. Zip has reported significant improvements in cash EBITDA and falling bad-debt ratios, supported by tighter credit standards and portfolio clean-up. Recent updates show ANZ transaction volumes slightly contracting as Zip applies more cautious underwriting, even while group earnings and transaction volume grow, led by the US.
• Rising funding costs, higher interest rates and an earlier period of credit losses have forced investors to focus on cash profitability and risk metrics rather than top-line growth. The impending BNPL Act reinforces this by introducing responsible-lending-style requirements and hardship expectations that penalise weak underwriting practices. Global capital markets have also cooled on unprofitable fintechs, pushing Australian BNPL firms to cut loss-making geographies, rationalise merchant portfolios, and reprioritise non-discretionary spending categories with lower loss rates.
• In Australia, merchant coverage is likely to grow more selectively, with providers focusing on profitable merchants and categories rather than “anywhere BNPL at any cost”. Credit limits and eligibility criteria will tighten for higher-risk consumers, while existing customers with strong repayment behaviour may see stable or gradually higher limits. For investors and regulators, the sector should look more like a mainstream specialty finance segment, with clear profitability, capital management, and risk appetite frameworks. For merchants, BNPL may become a more stable but less subsidised channel, with fewer promotional fee discounts as providers protect margins.

BNPL embeds deeper into mainstream retail and digital ecosystems

• BNPL has become standard at Australian online checkouts and is expanding further into in-store and platform environments. Afterpay is widely available at mass-market chains such as Kmart, BIG W and Chemist Warehouse, and continues to add omnichannel functionality. In 2025, Amazon Australia added Afterpay after years of offering only Zip, signalling BNPL’s status as a “must-have” option for leading marketplaces. Afterpay has also deepened integration with digital wallets (e.g., Google Pay) and launched a media network to monetise pseudonymous shopping data for advertisers, further embedding BNPL inside the broader retail and marketing stack.
• Merchants face stagnant or volatile retail sales and seek tools that can boost conversion rates and basket sizes without bearing credit risk on their own balance sheets. Afterpay’s economic-impact and fee-savings work highlights how BNPL can shift spend and reduce card-related fees for merchants, reinforcing merchant appetite to promote BNPL at checkout. Consumers, particularly Gen Z and Millennials, increasingly expect instalment options across discretionary and non-discretionary categories, including fashion, electronics, health, and everyday retail.
• BNPL in Australia is likely to behave more like embedded infrastructure than a niche payment add-on. Penetration at large retailers and marketplaces should deepen, with further integration into loyalty programs, retail media networks, and “one-tap” wallet experiences. At the same time, the move into utilities, healthcare, home improvement, and other essential spending will expand BNPL’s role in household cash flow management. Regulation will limit the more aggressive forms of upsell or advertising. Still, data-driven targeting within compliant frameworks is likely to increase as providers monetise their role in the retail ecosystem.

• High living costs have kept demand for short-term, low-fee credit strong, but banks and regulators are increasingly factoring BNPL into broader credit assessments. Research cited by government and media shows that BNPL is now the third-most-used form of consumer credit, with significant uptake among Millennials and Gen Z. As new rules take effect from June 2025, BNPL accounts and missed payments can affect credit reports. In parallel, Afterpay has highlighted cases where customers were asked to close BNPL accounts to secure mortgages, underlining how banks are actively managing BNPL exposure when assessing home-loan affordability.
• Household budgets have been squeezed by higher interest rates and living costs, pushing some consumers to rely on instalment products for everyday purchases. Regulators, concerned about over-commitment and hardship, are using the new BNPL regime and enforcement priorities to push lenders to consider all forms of credit, including BNPL, in suitability assessments. Banks, facing competition from BNPL for everyday spend, are responding by tightening how BNPL exposure is treated in mortgage underwriting while also expanding their own instalment features on cards and accounts.
• BNPL will increasingly sit inside a unified view of consumer creditworthiness. For some customers, responsible BNPL use may support credit profiles; for others, multiple BNPL accounts or arrears will limit access to larger loans. Banks and BNPL providers will need to coordinate more closely on data sharing, hardship support, and customer communication. Competition between traditional credit cards, bank instalment plans, and third-party BNPL is likely to intensify, with pricing and product design converging as all players operate under similar credit law obligations.

Competitive Landscape

Current State of the Market

• BNPL in Australia is now a regulated segment operating under the 2.02 trillionPL legislation, which requires licensing and responsible-lending-style obligations. This has increased competitive intensity by placing all providers on the same regulatory footing as credit issuers. The market is anchored by large multi-channel retailers, marketplaces and PSPs that treat BNPL as standard checkout infrastructure.
• Afterpay and Zip remain widely integrated across national retailers, while banks have increased competitive pressure by embedding instalments into card products. Regulation is likely to slow new standalone entrants but strengthen the position of providers that can manage compliance, underwriting and capital efficiently.

Key Players and New Entrants

• Afterpay continues to lead in breadth of merchant coverage and in-store integrations. Zip has focused on portfolio quality and sustainable growth, supported by strong merchant adoption across the discretionary retail sector. PayPal Pay-in-4 competes via its large wallet base, particularly among SMEs. Commonwealth Bank and NAB offer card-based instalment plans, positioning the banks as direct competitors rather than complementary players.
• New entrants are limited, with competitive momentum instead coming from banks and PSPs embedding instalment options rather than new fintech launches. Global players such as Klarna maintain selective exposure but have scaled back local investment compared with earlier years.

Recent Launches, Mergers, and Acquisitions

• Amazon Australia enabled Afterpay as a new BNPL option in 2025, expanding Afterpay’s marketplace penetration and intensifying competition with Zip, which was previously Amazon’s sole BNPL partner. Providers have focused on product enhancements, such as deeper wallet integrations, retail media tools, and improved risk systems, rather than on major M&A. The sector has seen consolidation pressures, but no large-scale Australian BNPL acquisitions have occurred in the last year, reflecting the shift toward regulatory compliance and internal optimisation.

Report Scope

Australia Retail Industry & Ecommerce Market Size and Forecast

• Retail Industry - Spend Value Trend Analysis
• Buy Now Pay Later Share of Retail Industry
• Ecommerce - Spend Value Trend Analysis
• Buy Now Pay Later Share of Ecommerce

Australia Buy Now Pay Later Market Size and Industry Attractiveness

• Gross Merchandise Value Trend Analysis
• Average Value Per Transaction Trend Analysis
• Transaction Volume Trend Analysis
• Market Share Analysis by Key Players

Australia Buy Now Pay Later Revenue Analysis

• Buy Now Pay Later Revenues
• Buy Now Pay Later Share by Revenue Segments
• Buy Now Pay Later Revenue by Merchant Commission
• Buy Now Pay Later Revenue by Missed Payment Fee Revenue
• Buy Now Pay Later Revenue by Pay Now & Other Income

Australia Buy Now Pay Later Operational KPIs

• Buy Now Pay Later Active Consumer Base
• Buy Now Pay Later Bad Debt

Australia Buy Now Pay Later Spend Analysis by Business Model

• Two-Party Business Model
• Third-Party Business Model

Australia Buy Now Pay Later Spend Analysis by Purpose

• Convenience
• Credit

Australia Buy Now Pay Later Spend Analysis by Merchant Ecosystem

• Open Loop System
• Closed Loop System

Australia Buy Now Pay Later Spend Analysis by Distribution Model

• Standalone
• Banks & Payment Service Providers
• Marketplaces

Australia Buy Now Pay Later Spend Analysis by Channel

• Online Channel
• POS Channel

Australia Buy Now Pay Later By End-Use Sector: Market Size and Forecast

• Retail Shopping
• Home Improvement
• Travel
• Media and Entertainment
• Services
• Automotive
• Health Care and Wellness
• Others

Australia Buy Now Pay Later By Retail Product Category: Market Size and Forecast

• Apparel, Footwear & Accessories
• Consumer Electronics
• Toys, Kids, and Babies
• Jewelry
• Sporting Goods
• Entertainment & Gaming
• Other

Australia Buy Now Pay Later Analysis by Consumer Attitude and Behaviour

• Spend Share by Age Group
• Spend Share by Default Rate by Age Group
• Spend Share by Income
• Gross Merchandise Value Share by Gender
• Adoption Rationale
• Spend by Monthly Expense Segments
• Average Number of Transactions per User Annually
• BNPL Users as a Percentage of Total Adult Population

Reasons to Buy

• Strategic and Innovation Insights: Gain clarity on the future direction of Australia's Buy Now Pay Later market by analysing strategic initiatives, business model evolution, and innovation-led approaches adopted by key BNPL providers to strengthen market positioning.
• Comprehensive Understanding of BNPL Market Dynamics in Australia: Assess market size, growth outlook, and structural shifts across retail and e-commerce, supported by detailed segmentation by channel, business model, distribution model, merchant ecosystem, end-use sector, and consumer demographics, underpinned by 90+ KPIs.
• Value and Volume-Based KPIs for Market Accuracy: Leverage a robust set of value and volume KPIs, including GMV, average transaction value, transaction volume, active users, revenue, and bad debt, to develop a precise understanding of BNPL adoption, usage intensity, and market maturity.
• Competitive Landscape Assessment: Obtain a clear snapshot of the BNPL competitive landscape in Australia, including market share analysis of leading providers, enabling informed benchmarking and evaluation of market concentration and competitive intensity.
• Actionable Inputs for Market Entry and Expansion Strategies: Identify high-growth categories, priority end-use sectors, and distribution channels to fine-tune go-to-market and partnership strategies, while assessing key trends, regulatory considerations, and risk factors shaping the BNPL ecosystem.
• In-Depth Consumer Behaviour Analysis: Enhance ROI by understanding evolving consumer attitudes and spending behaviour, with insights into BNPL adoption drivers, usage frequency, income and age-based usage patterns, gender splits, and monthly expense segmentation.