What is BNPL? - Definition 

Buy Now Pay Later (BNPL) is a way of spreading out your payments when you buy something, it’s like an instalment plan. It is possible to ‘Buy Now Pay Later’ on a wide range of things these days, from small purchases in shops, to services such as medical and vet bills, and much more expensive things like home renovations or solar panels.

When a purchase is made using BNPL, the provider you have an account with pays for it on your behalf. You then repay the BNPL provider over an agreed length of time, in instalments.

Each BNPL provider has its own rules about how much you need to pay in each instalment, and how long you have to pay them for the whole amount.

You do not pay interest when you use BNPL. However, each BNPL provider has different types of fees that they charge. For example, you may be charged a fee for using their service. Most providers charge a fee if you are late in paying your instalment – so it is very important to read the terms and conditions before you sign up and to keep an eye on when payments are due.

If you see this 'tick' (see below), the BNPL provider is a member of the AFIA Code of Practice. BNPL providers that are signed up to the Code of Practice make nine key commitments, or promises, to you about how they will treat you as a customer.


There are a number of instalment planswhich are similar to BNPL, but which do not meet the definition under the Code of Practice. These include some companies which allow you to split payments directly with them (rather than through a BNPL Provider), and also products which are in effect instalment plans supported by a credit card. 

The definition of a BNPL Product or Service under the Code is 

BNPL Product or Service means:

1. A shorter term product or service for the purchase of goods or services sold to consumers where the consumer repays the purchase in instalments.  Consumers are informed by the BNPL Provider of the repayment amounts and payment schedule and will pay no interest charges for individual purchases if they pay within a specified period; or

2. The provision of a credit contract for the purchase of goods or services. Some contracts require a minimum periodic repayment; others involve a fixed repayment plan for each purchase. Multiple advances of credit may be available. No interest is charged, and any fees for providing the credit are limited to $200 in the first year and $125 in each subsequent year; and

  • There is a contract between the customer and the BNPL Provider, and a contract between the customer and the Merchant or Retail Partner; and
  • The customer buys and receives goods or services from a Merchant or Retail Partner; the BNPL Provider pays the Merchant or Retail Partner for the purchase (minus merchant fees), and the customer repays the Buy Now Pay Later Provider for their purchase.

For the avoidance of doubt, the following are not considered a BNPL Product or Service for the purposes of this Code even if they are marketed or described as a BNPL product or service:

  • Products or services offered to persons or strata corporations that are predominantly for a purpose that is not a consumer purpose. ‘Predominant’ (as defined in s5(4) of the National Credit Code) means: (a) the purpose for which ‘more than half’ of the credit is intended to be used and (b) if the credit is intended to be used to obtain goods or services—the purpose for which the goods or services are intended to be ‘most used’;
  • Personal loans, mortgages or consumer leases;
  • Short term borrowing where a pay day lender typically provides small cash loans to individuals that are repaid at their next pay date; or
  • Any earned wage or salary access arrangement, where a lender has an arrangement with an employer to give an employee access to an amount they have earned during a pay period in advance of the normal payment date.