Dublin, Feb. 03, 2026 (GLOBE NEWSWIRE) -- The "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" report has been added to ResearchAndMarkets.com's offering.
The BNPL payment market in Australia is expected to grow by 17.5% on annual basis to reach US$18.34 billion in 2026. The buy now pay later market in the country has experienced robust growth during 2022-2025, achieving a CAGR of 25.1%. This upward trajectory is expected to continue, with the market forecast to grow at a CAGR of 12.7% from 2026-2031. By the end of 2031, the BNPL sector is projected to expand from its 2025 value of USD 15.60 billion to approximately USD 33.30 billion.
Over the next 2-4 years, consolidation is likely as regulatory costs rise. Banks will play a larger role through credit-linked instalments, and BNPL providers will differentiate through risk discipline, merchant analytics and loyalty integrations. Market share will increasingly favour players with strong capital bases, diversified channels and compliance infrastructure.
Current State of the Market
- BNPL in Australia is now a regulated segment, 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.
Key Trends and Drivers
Providers pivot from growth to profitability and disciplined underwriting.
- 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.
- 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.
Cost-of-living pressures and bank competition reshape BNPL's role in consumer credit.
- 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.
- 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.
Key Attributes:
| Report Attribute | Details |
| No. of Pages | 101 |
| Forecast Period | 2026 - 2031 |
| Estimated Market Value (USD) in 2026 | $18.34 Billion |
| Forecasted Market Value (USD) by 2031 | $33.3 Billion |
| Compound Annual Growth Rate | 12.7% |
| Regions Covered | Australia |
Report Scope
Australia Buy Now Pay Later Key Companies
- Afterpay
- ZipPay
- PayPal
- Sezzle
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
For more information about this report visit https://www.researchandmarkets.com/r/dcg0l6
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