eBay-owned PayPal has told the Australian government that it backs regulation on buy-now-pay-later (BNPL) loans.

In a submission to the government PayPal, which itself offers BNPL services with safeguards, said that the practice should face some regulation in order to ensure "consumer and industry certainty and competitive neutrality".

PayPal’s statement, signed by its Australia general manager Andrew Toon, said that it supports "a tailored, proportionate and thoughtful regulatory framework for the BNPL sector via the National Consumer Credit Protection Act to achieve the Government's objective to deliver greater consumer protections.”

It added that it sees “merit in further consideration of the development of a bespoke BNPL credit reporting framework" without the full "costs typically associated with engaging in the credit reporting regime".

The Australian government is currently carrying out an inquiry into BNPL regulation. PayPal is the most noteworthy advocate for regulating BNPL, with other companies in the space calling for minimal or self-regulation. Afterpay, Australia’s biggest BNPL company owned by Twitter founder Jack Dorsey, said that companies in the space should follow an industry-run code of conduct and that “the status quo has demonstrated its ability to prevent consumer harm".

The adoption of BNPL exploded during the Covid-19 pandemic, when locked-down shoppers drove a surge in online shopping. Unlike other loans however the absence of interest charges has exempted them from consumer credit law, leading some to draw comparisons between BNPL and predatory payday loans.

The Australian Securities and Investments Commission has called on BNPL to be subject to consumer protection laws as "credit products with similar characteristics and the same purpose and function should be treated the same way".

The Australian government has made no secret of its desire to implement BNPL regulation, with the country currently having one active BNPL account for every four people.

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