Australia Buy Now Pay Later (BNPL) Market Size, Share, Growth and Forecast, 2025-2035

Licensed installment credit moves into stores and big buys

The Australia buy now pay later (BNPL) market was valued at USD 14.49 billion in 2025 and is projected to increase from USD 15.87 billion in 2026 to USD 35.21 billion by 2035, registering a CAGR of 9.26% during 2026–2035. Demand comes from shoppers who split online and in-store purchases into short installments, merchants that add installment options at checkout to lift basket sizes, and households that finance larger items over several months. New South Wales held the largest regional share, 34.9% in 2025, because Sydney concentrates retail spending, young professionals and online merchants. Western Australia and the remaining jurisdictions form the fastest-growing zone at 9.59% a year, as card-based plans reach shoppers far from metropolitan retail centers. In turn, regulation reshaped supply when every provider needed an Australian credit licence from June 10, 2025, which favors well-capitalized lenders with strong credit assessment systems.

Which installment plans and providers does the estimate cover?

The estimate measures the value of purchases financed through installment plans that Australian consumers use at online and physical merchants. It covers interest-free plans paid in four parts, medium-term plans over several months and longer plans for considered purchases such as phones, solar systems and health treatments. Values include plans offered by specialist providers, payment groups and banks through websites, apps and store terminals.

The estimate excludes credit card balances, personal loans that are not linked to a merchant checkout, and business trade credit between companies. The value chain runs from wholesale funders and warehouse lenders through licensed providers, payment networks and merchant acquirers to retailers, service businesses and households across every state and territory.

Short-cycle plans lead while long-term plans grow fastest

Why do short-cycle plans lead product demand?

Based on product type, the market is categorized into short-cycle installments, medium-term installments and long-term installments. Short-cycle instalments led with a 68.0% share of 2025 value, because pay-in-four plans remain the default option for fashion, beauty and everyday retail. Long-term instalments grow fastest at 11.60% a year, as providers finance phones, solar systems and health treatments over longer terms.

How do age groups split installment spending?

Based on customer segment, the market is categorized into consumers aged 18-29, consumers aged 30-44, and consumers aged 45 and above. Consumers aged 30-44 led with a 40.0% share of 2025 value, because working families finance household goods, travel and school costs with installment plans. Consumers aged 45 and above grow fastest at 10.07% a year, as older households finance energy upgrades and larger purchases.

Why is physical point of sale the fastest-growing channel?

Based on distribution channel, the market is categorized into merchant website checkout, mobile application checkout and physical point of sale. Merchant website checkout led with a 44.0% share of 2025 value, because most installment plans began as online checkout options. Physical point of sale grows fastest at 10.30% a year, as shoppers tap virtual cards in phone wallets at store terminals.

How do specialists and banks share installment supply?

Based on institution type, the market is categorized into specialist non-bank providers, diversified payment groups and authorised deposit-taking institutions. Specialist non-bank providers led with a 72.0% share of 2025 value, because they built the merchant networks and apps that shoppers know. Authorised deposit-taking institutions grow fastest at 10.83% a year, as banks add installment features to the cards their customers already hold.

Checkout reach, card access and larger purchases lift volume

How does embedded checkout distribution lift volume?

Embedded checkout distribution lifts volume, because installment buttons sit inside the websites and apps where Australians already shop. About 96.1% of Australians used the internet in 2024, according to World Bank data, which gives online checkouts near-universal reach. Zip Co reported 60,800 merchants in Australia and New Zealand at June 30, 2025, up 10.3% on the prior year. The same business processed 47.7 million transactions in fiscal 2025, an increase of 12.6%, as customers used plans more often. As a result, merchant website checkout holds a 44.0% share of 2025 value, while mobile application checkout gains share as shoppers move to digital wallets.

Why does card-enabled physical acceptance widen use?

Card-enabled physical acceptance widens use, because virtual cards let shoppers split purchases at any store that takes contactless phone payments. Afterpay's Plus card lets users tap almost anywhere that Apple Pay, Google Pay or Samsung Pay is accepted. CommBank's StepPay splits purchases of $100 or more into four parts anywhere Mastercard is accepted, both in-store and online. Cards still made up about 73% of consumer payments in 2025, according to the Reserve Bank of Australia, so card rails give installment plans broad acceptance. In turn, physical point of sale grows at 10.30% a year, the fastest channel rate, as plans reach existing store card terminals.

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How does considered-purchase financing raise ticket sizes?

Considered-purchase financing raises ticket sizes, because providers now fund phones, solar systems and health treatments over longer terms. Afterpay launched monthly plans at Apple Stores across Australia in July 2026, with terms of 6, 12 or 24 months and limits of $1,000 to $20,000. Brighte secured up to $40 million from the Clean Energy Finance Corporation in November 2025 for green loans of $2,000 to $55,000. Humm Group also reported that growth in fiscal 2025 came from longer term verticals, namely health and solar. As a result, long-term installments grow at 11.60% a year, the fastest product rate, as larger tickets lift average plan value.

Why does licensed regulation build trust in installment credit?

Licensed regulation builds trust in installment credit, because clear rules on affordability and complaints make banks, merchants and shoppers more willing to use the products. Parliament passed the reform law on Nov. 29, 2024, when there were around 7 million active accounts, according to the Treasury ministers. From June 10, 2025, every provider needed an Australian credit licence and membership of the complaints authority, according to the Australian Securities and Investments Commission. Humm launched a regulated hybrid product in June 2025 and placed its legacy plan into runoff. In turn, authorised deposit-taking institutions grow at 10.83% a year, as licensing narrows the gap with specialist providers.

Monthly plans, bank products and energy loans widen use

How is the shift to monthly plans changing product mix?

The shift to monthly plans is changing the product mix, because shoppers want installment options for items that cost more than a typical pay-in-four limit. Afterpay's monthly plans at Apple Stores carry a standard rate of 19.99% a year, with a 0% promotional rate at Apple for a limited time. Late fees on those plans are capped at the lower of 15% of the order or $250. Zip Co scaled its Zip Plus product to new customers in August 2024 and launched a personal loan in January 2025. As a result, medium-term and long-term installments together hold a growing part of 2025 value, as providers price longer credit for larger baskets.

Why is the rise of bank installment features reshaping supply?

The rise of bank installment features is reshaping supply, because banks can offer plans inside the cards and apps their customers already use. CommBank's StepPay sets a spend limit after reviewing income, expenses and other credit inside the CommBank app. Customers can also add eligible CommBank cards to Klarna directly from the CommBank app. Zip Co active customers in Australia and New Zealand fell 6.8% to 2.04 million at June 30, 2025, which shows that specialists face tougher competition for users. In turn, diversified payment groups and banks grow faster than specialists, although specialist non-bank providers keep a 72.0% share of 2025 value.

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Can energy upgrades open a larger financing pool?

Energy upgrades open a larger financing pool, because households need credit for solar panels, batteries and efficient appliances. About 193,000 batteries were installed under the Cheaper Home Batteries Program in its first six months to December 2025, according to the Clean Energy Regulator. Those batteries added 4.6 GWh of capacity, which shows the scale of household spending on home battery systems. Brighte has supported more than 200,000 Australian households with over $2 billion in sustainable finance to date. As a result, consumers aged 45 and above grow at 10.07% a year, the fastest customer rate, as homeowners finance energy upgrades.

Is there room for installments in services and health?

Installment plans have room to grow in services and health, because dental, veterinary, travel and education bills often exceed what households can pay at once. Humm Group reported that its fiscal 2025 growth came from health and solar verticals, which shows that providers are moving beyond retail goods. Humm's point-of-sale volume across its markets rose 9% to A$1,037.9 million in fiscal 2025. Zip Co transaction volume in Australia and New Zealand also rose 5.5% to A$3,749.7 million in the same year. In turn, service merchants that add installment options can win customers who would otherwise delay treatment or bookings.

Licensing costs, arrears and fee pressure test providers

How do licensing costs weigh on smaller providers?

Licensing costs weigh on smaller providers, because credit licences require compliance teams, dispute handling and affordability checks that add fixed costs. Smaller lenders must spread these costs over fewer accounts than the largest specialists. As a result, some providers may exit, sell their books or partner with larger lenders. Providers respond with automated credit checks, shared compliance services and simpler product ranges that reduce the cost of each approval.

Why do arrears and hardship pressure approval rates?

Arrears and hardship pressure approval rates, because higher living costs leave some households unable to meet fortnightly repayments on several plans at once. Providers must now assess whether credit is unsuitable before approving new limits. In turn, approval rates fall for applicants with thin or stretched credit files. Providers respond with lower starting limits, repayment reminders and hardship arrangements that keep customers paying without adding late fees.

How could payment cost reform change merchant economics?

Payment cost reform could change merchant economics, because merchants pay installment providers higher fees than they pay for most card payments. The Reserve Bank decided in March 2026 to remove card surcharging on the main networks from Oct. 1, 2026. The bank also plans to consult in mid-2026 on areas outside that review, including installment services. As a result, providers may face pressure on merchant fees, so they are adding consumer-paid monthly plans and card interchange.

Why does competition from banks squeeze specialist margins?

Competition from banks squeezes specialist margins, because banks can fund installment plans with deposits that cost less than wholesale funding. Banks also hold income and spending data on their own customers, which speeds credit decisions. In turn, specialists must spend more on merchant deals and marketing to keep users. Specialists respond with exclusive merchant partnerships, rewards programs and longer plans that banks have been slower to offer.

New South Wales leads while western states grow fastest

Why does new South Wales hold the largest share?

New South Wales held a 34.9% share of 2025 value and grows at 8.99% a year, because Sydney concentrates retail spending, online merchants and young working shoppers. The state had about 8.67 million residents at March 31, 2026, the largest population of any state. However, growth is slower than in other zones because population growth was lower at 1.1% over the year. Large retail centers in the state already offer installment options at most checkouts.

How does Victoria support installment growth?

Victoria held a 25.8% share of 2025 value and grows at 9.19% a year, because Melbourne has a large fashion, electronics and online retail base. The state added about 109,500 residents in the year to March 2026, a growth rate of 1.6%. This growth lifts demand for household goods, travel and services that shoppers often split into installments. Card-based plans also spread installment use across regional towns in the state.

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Why does Queensland outpace the eastern average?

Queensland held a 21.3% share of 2025 value and grows at 9.49% a year, because fast population growth and strong household spending widen the shopper base. The state added about 90,100 residents in the year to March 2026, a growth rate of 1.6%. Solar and battery upgrades are also common across the state, which supports longer financing plans. Tourism and services add further installment spending in coastal regions.

Why are the western and remaining jurisdictions growing fastest?

Western Australia and the remaining jurisdictions held an 18.0% share of 2025 value and grow fastest at 9.59% a year, because card-based plans reach shoppers far from large retail centers. Western Australia had the fastest state population growth at 2.1% in the year to March 2026. South Australia, Tasmania, the Northern Territory and the Australian Capital Territory add a further base of online shoppers.

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Licensing, monthly plans and new products shaped 2024-2026

Virtual cards, credit checks and app wallets reshape plans

• Virtual installment cards sit in phone wallets and let shoppers tap to split purchases at any contactless terminal, which removes the need for merchant integration.
• Automated affordability checks review income, expenses and credit files in minutes, which supports licensed lending rules.
• Bank app integration lets customers add cards to installment services and manage plans inside their banking app, which gives banks a direct route to existing customers.
• Merchant checkout plugins add installment options to online stores with little development work, which widens merchant reach.

Specialists and banks compete on reach and approval quality

Competition is led by specialist providers with large merchant networks, alongside banks and payment groups that offer installment features inside existing cards and apps. Afterpay extended its reach with a tap-to-pay card and monthly plans at Apple Stores in July 2026. Zip Co grew its merchant base to 60,800 in Australia and New Zealand in fiscal 2025 and added a personal loan in January 2025. Humm Group launched a regulated hybrid product in June 2025 and focuses on health and solar purchases. CommBank offers StepPay to its own customers and links its cards to Klarna through the CommBank app. Brighte specializes in green loans for solar, batteries and home energy upgrades with support from a federal clean energy financier. Rivals compete on merchant reach, approval quality, funding cost, app experience and the range of plan lengths they can offer.

Companies profiled and their roles in this market

Credence Research view on Australian installment credit

Credence Research's view is that Australian installment value will keep growing faster than retail spending because card access, larger purchases and licensed regulation widen use. Short-cycle plans remain the core of the market, while monthly plans, energy loans and in-store card use gain share. Licensing raised costs for smaller providers but made banks and large merchants more willing to adopt the products. Providers that combine merchant reach, careful credit decisions and low funding costs should gain share fastest.

How the Australian installment value estimate was built

The report uses 2025 as the base year on a calendar basis, and market values come from the Credence Research model. That model combines central bank payment survey data, government and regulator releases, population statistics, World Bank internet data, clean energy program statistics and listed-company operating disclosures. Segment splits and regional growth rates are Credence Research estimates, while regional shares follow the client-defined split. Sources used are public reports, official statistics, company releases and trade press, and no interviews or surveys were used.

Regulated growth and larger tickets carry value to 2035

Installment value is expected to reach USD 35.21 billion by 2035, a 9.26% CAGR during 2026–2035, as card access, longer plans and energy upgrades keep demand rising. Growth should stay steady through 2028 while providers adjust to licensing and payment cost reforms. After that, monthly plans, bank products and in-store card use will carry more growth as shoppers finance larger items. Tighter credit conditions would slow approvals, while lower funding costs would support growth. Providers with strong merchant networks and careful lending are expected to gain the most.

Note: The depth of individual sections depends on data availability for this market. Volume, capacity, trade and other unit-based metrics are included where applicable.