Buy Now
Pay Later Code
The seven Buy Now Pay Later (BNPL) providers who are accredited to this Code represent an estimated 90 percent of the BNPL market based on the number of active accounts as at 30 June 2022, and include Afterpay, Brighte, Humm Group, Klarna, Payright, Plenti and Zip Co.
AFIA's BNPL Code of Practice can be found here.
The BNPL Code of Practice came into effect on 1 March 2021.
The Code goes above and beyond the law in Australia, setting best practice standards for the sector and strengthening consumer protections. It does this while preserving customer choice to make purchases and payments in a way that suits their needs and preferences.
AFIA has updated its BNPL industry data and economic impact research to include FY22, see fact sheet here.
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On 14 October 2022, AFIA announced an independent review of the Buy Now Pay Later Code of Practice (the BNPL Code) and appointed Promontory Australia to conduct the review.
AFIA welcomes the release of Promontory’s independent review of the BNPL Code.
AFIA supports all of the recommendations made by Promontory to further strengthen the BNPL Code. The BNPL sector is committed to delivering consumer protections, while encouraging innovation, competition, and choice in the market. A list of the recommendations and AFIA’s response can is here.
As part of the independent review, Promontory conducted a public consultation and received non-confidential submissions from Afterpay, the Australian Retailers Association, the Australian Retail Credit Association, the Australian Small Business & Family Enterprise Ombudsman, Cash Converters, the Consumers Federation of Australia, the Shooting Industry Foundation Australia, and AFIA. AFIA thanks all the respondents for their participation in the consultation process.
We will now work through the technical and implementation details of the changes with BNPL providers and stakeholders in the coming weeks and months.
To get more information about the BNPL Code of Practice and the review, please contact bnplcodereview@afia.asn.au.
The economic impact of BNPL in Australia
Every
of consumer spending using BNPL results in…
$1 million
7.9 jobs
annual employment
$1.2 million
in Australian GDP
of consumer spending using BNPL results in…
$15.3 billion
annual employment
120,000 jobs
in Australian GDP
$18.4 billion
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active accounts in Australia
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value of transactions
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average transaction value
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active BNPL usage per annum
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BNPL-accepting retailers
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New revenue generated by BNPL
0.66%
share a total of transactions under the Australian payments systems
0.39%
of active accounts were in hardship on 30 June 2022
0.02%
ration of BNPL-related EDR complaints to active accounts as at 30 June 2022
Code compliant members
BNPL Code Compliance Committee
The Buy Now Pay Later Code Compliance Committee (CCC) is an independent committee responsible for the administration and enforcement of the Code of Practice. As part of their role in administering the Code, the CCC will monitor and investigate a Code Compliant Member's compliance, and impose sanctions for non-compliance.
The CCC has been selected to have legal, consumer and industry representatives. As Chair of the BNPL CCC, Ms Brewer’s role is critical to ensuring that oversight of this Code is administered in a fair, reasonable, independent and effective way. As another means to ensure independence, the CCC’s consumer representative was nominated and appointed through the Consumers' Federation of Australia.
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The CCC is responsible for overseeing and administering the BNPL Code of Practice, including monitoring and investigating Code Compliant Members' compliance, and imposing sanctions for non-compliance.
The CCC will use their powers when investigating ‘Alleged Breaches’ of the Code. They will also collect data so they can monitor Code Compliant Members for compliance with the Code.
If the CCC believes that a Code Compliant Member has breached the Code, it has the power to impose a series of sanctions, detailed below.
The CCC will be obligated to impose certain mandatory sanctions for breaches deemed ‘significant’, for example, a breach that is found to be systemic in nature will then require reporting to ASIC. Having mandatory sanctions goes above and beyond other industry codes.
The sanctions include the power to name a non-complying BNPL provider and publicise a notice of non-compliance on AFIA’s website, in AFIA’s Annual Review and/or in a media release.
At their discretion, the CCC may impose a number of different Sanctions on a Code Compliant Member, including:
1. Rectifying the breach by undertaking a commercially reasonable rectification process and settling the complaint with the customer.
2. Reviewing the provider's plan of action for remedying a complaint lodged with them.
3. Issuing a formal warning to the provider.
4. Requiring a Code Compliance audit of the provider at their expense.
5. Reporting the alleged breach of the Code to the relevant regulatory bodies such as ASIC, AFCA (see Schedule 1 of the BNPL Terms of Reference for more information).
6. Naming the provider and publicising a notice of non-compliance on AFIA’s website, in AFIA’s Annual Review and six-month report.
7. Naming the provider and publicising a notice of non-compliance in a media release.
8. Requiring the provider to cease portraying itself as a Code Compliant Member (including removing the accreditation symbol, only used by these members, from their website or other information).
9. Suspending or revoking the provider’s certification as a Code Compliant Member.
10. Recommending to the Board that the provider’s membership of AFIA be reviewed, suspended or terminated.
For further information about the role of the CCC and its powers can be found in the Terms of Reference.
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When a BNPL provider wants to be a member of the Code of Practice, the CCC undertake a detailed and rigorous process to understand their business and ensure that they can meet the industry standards as set out in the Code.
The process of accreditation includes providing information to the CCC on their systems and processes, to show how it will comply with the Code. This includes sharing documentation on their complaint handling and hardship policies, information about their upfront and existing customer assessments, and their merchant guidelines and monitoring processes.
The BNPL provider also needs to show they have appropriate risk management arrangements for their business and have adequate arrangements for compensating BNPL customers.
If the BNPL provider is able to demonstrate to the CCC that they are able to comply with the Code, they become a ‘Code Compliant Member’ or Code Signatory. This means they can display an accreditation symbol in the relevant places on their documents and website.
As part of their ongoing role in administering the Code, the CCC will collect information and data from the Code Compliant Members on a regular basis to ensure that they continue to meet the required standards. The CCC will determine what information should be collected, but it is likely to include information on complaints, hardship and merchant monitoring.
The CCC can also receive complaints from customers about 'Alleged Breaches' of the Code by a Code Complaint Member. The CCC is authorised to investigate complaints lodged and as part of that are granted access to all relevant records required to carry out the task. Code Compliant Members are required to cooperate with these investigations and comply with all reasonable requests. Following the submission and review of a complaint, the CCC have the power to make a range of recommendations to resolve a complaint and have powers to impose a range of sanctions.
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Fee Fact Sheet
As part of the Buy Now Pay Later Code of Practice, Code Compliant Members agree to limits on the types and levels of fees they charge their customers.
There are a number of different types of fees that you might be charged:
*Please note that the descriptions as outlined below are intended to provide only a general overview. You should check with your BNPL provider for the exact definitions they use and the fees that apply to you.
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This is a fixed fee that is charged in relation to your account with your BNPL provider. It is charged usually on either a fortnightly or monthly basis and will generally only apply when you have an outstanding balance on your BNPL product or service. You should check with your BNPL provider whether or not this fee will apply when you have no outstanding balance.
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This is a fixed fee that is charged upon establishing each BNPL product or service (you may have multiple BNPL products or services with a single provider). It can also be called an 'upfront fee' and is usually paid either when you receive approval or is paid over the term of your BNPL product or service with your regular repayment.
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This is an administration cost for payment processing and is generally charged per repayment.
There are limits on the total value of the fees that can be charged, depending on how long you have to repay the amount.
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For BNPL products or services that need to be repaid in 62 days or less, fees and charges are not to exceed 5% of the amount of the purchase.
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For BNPL products or services that are repaid on a term longer than 62 days, customers can be charged an upfront fee (e.g. an establishment fee), and also a periodic fee (e.g. a payment processing fee) that is charged for the provision of the BNPL product or service. These are fixed fees that are not to exceed more than $200 AUD in the first year and $125 AUD per year thereafter. You should check with your BNPL provider that the fees they charge are under this cap.
*The fees described in the table above do NOT include late fees. Under the BNPL Code, all late fees must be capped (stopped at a certain limit). Each BNPL Provider determines their own late fee cap.
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These are fees charged for when you do not pay your scheduled repayment on time.
The BNPL Code requires all Code Compliant Members to contact you before charging you a late fee, or if they do not contact you, they will need to waive any late fees charged if you make a catch-up payment within two days of the missed payment.
For example, John forgets to make his $40 repayment to his BNPL provider. He did not receive a reminder from his BNPL provider. He makes the $40 repayment to his BNPL provider the next day. His BNPL provider will now be obliged to waive any late fees charged.
Under the BNPL Code, all Code Compliant Members will need to give you at least 40 business days’ notice before increasing or introducing any new fees. This is double the amount of time required under the current industry standard.
See here for the AFIA BNPL Fact Sheet.
Reporting a breach of the Code
Customers can lodge a complaint with their BNPL provider if they have a dispute about their BNPL account. This includes complaints about repayments, refunds, fees and charges, access to the account, the BNPL provider’s customer service, or anything else related to the operation of the account. The BNPL provider is best placed to assist customers to quickly resolve any issues. However, if they are not satisfied with the outcome or how the BNPL provider handles their complaint, customers can lodge a complaint with the Australian Financial Complaints Authority. AFCA provides consumers and small businesses with free and independent dispute resolution for financial complaints.
Alleged breaches of the Code can be reported to the BNPL Code Compliance Committee using the form below or by emailing CCC-BNPL@afia.asn.au . The Code Compliance Committee does not provide a dispute resolution service in relation to individual complaints and customers should contact their BNPL provider first to resolve any problems.
Financial difficulty
If you are unable to make your next repayment or are experiencing financial difficulty, it is important you contact your BNPL provider as soon as possible to discuss your options.
As part of the Code of Practice, the BNPL providers commit to treating you with sensitivity, understanding and best industry practice, especially when it comes to the factors that are or could contribute to you being financially vulnerable.
They are also required to have a hardship policy, ensuring you can submit a Hardship Request that is fair and accessible.
If you decide to submit a Hardship Request they will respond to it within 21 days of receiving it and clearly communicate the options available to assist with your situation. And while they are consider your Hardship Request they will freeze any late fees.