BNPL Providers Face Regulatory Crossroads: ASIC’s June Deadline and Investment Implications

The buy now, pay later (BNPL) industry—once the poster child of fintech innovation—is now at a critical juncture. By June 10, 2025, all BNPL providers in Australia must hold a valid credit licence from the Australian Securities and Investments Commission (ASIC) to continue operating. This regulatory milestone, driven by the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024, marks a pivotal test for companies like Afterpay, Zip Co, and Sezzle. The stakes are high: failure to comply could result in forced shutdowns, while compliance could cement market dominance.

The Regulatory Tightrope

ASIC’s deadline is not a single event but a two-step process. First, providers must submit credit licence applications by May 11, 2025, giving ASIC enough time to review them. Second, ASIC must accept the application for lodgement by June 10, 2025. Complicating matters, providers must also join the Australian Financial Complaints Authority (AFCA) beforehand. Delays in criminal history checks or incomplete applications could leave companies stranded.

The pressure is amplified by the cost of compliance. Licensing fees, AFCA membership, and operational adjustments could eat into profit margins, particularly for smaller players. Meanwhile, ASIC’s guidance—INFO 285—emphasizes that firms must demonstrate “appropriate governance and risk management frameworks,” adding another layer of scrutiny.

Winners and Losers in the Licensing Race

The regulatory shakeout will likely favor established players with existing credit licences or deep pockets. Afterpay (APT.AX), for instance, already holds a credit licence and has signaled its intention to comply. In contrast, newer entrants such as Sezzle (SZL.AX)—which relies on partnerships for its licence—face higher uncertainty.

Market sentiment is already pricing in risks. Shares of Zip Co (ZIP.AX), which has struggled with debt and regulatory hurdles, have underperformed peers this year. Meanwhile, Afterpay’s stock has held steady, reflecting investor confidence in its compliance readiness. However, the broader sector has seen volatility, with BNPL stocks down 15–20% since mid-2023 amid concerns over rising interest rates and consumer debt.

The Bigger Picture: A Sector Reset

ASIC’s deadline isn’t just about compliance—it’s a catalyst for industry consolidation. Smaller players unable to meet licensing costs or timelines may exit, reducing competition and allowing survivors to capture larger market shares. For investors, this creates a “buy the dip” opportunity in solid firms but a red flag for weaker ones.

The data underscores this divide. BNPL providers with over 50% of their revenue tied to Australia (like Afterpay) are better positioned than global peers reliant on unregulated markets. Additionally, companies with strong cash reserves—such as Afterpay’s AU$1.2 billion in liquidity—can absorb compliance costs without diluting equity.

Conclusion: June 2025 as a Make-or-Break Moment

The June 2025 deadline is a binary test for BNPL providers. For investors, the key is to distinguish between firms that are actively preparing (e.g., submitting applications early, strengthening governance) and those playing catch-up.

The data paints a clear picture:
- Afterpay’s stock resilience and liquidity position suggest it could emerge as a regulatory winner.
- Zip Co’s debt-to-equity ratio of 1.8x (vs. Afterpay’s 0.3x) raises red flags about its ability to navigate compliance costs.
- Sezzle’s reliance on third-party licences introduces dependency risks.

Failure to secure a licence by June 10 would trigger immediate consequences—delisting, fines, or even bankruptcy. Conversely, compliance could unlock a “regulatory tailwind,” as BNPL gains legitimacy and expands into new markets. Investors should prioritize firms with clear compliance roadmaps and strong financial buffers. For the sector, this deadline is less an end and more the start of a new, regulated era—one where only the prepared will thrive.

As the clock ticks, the message is clear: act now, or pay later.