Buy Now Pay Later VS Pay Advance: What’s the difference?
Buy Now, Pay Later (BNPL) and pay advance products have both grown quickly in Australia in recent years. Both offer immediate access to funds that you repay later, and their digital accessibility adds to their convenience, making them increasingly popular.
The most important difference between the two comes down to how the law treats them, and that’s where things have shifted recently. For a long time, BNPL sat outside Australia’s credit laws, but that’s no longer the case. Since 10 June 2025, BNPL products have been regulated under the National Credit Act and the National Credit Code, with most BNPL products now treated as a new category called low cost credit contracts. Pay advance products sit in a different place under the law again. Because the two products are now regulated differently, and because that affects things like your credit file, it’s worth understanding how they actually compare before you choose one.
At a glance
The table below outlines the main differences between the two product types. Terms vary between providers on both sides, so treat it as a general guide rather than a description of any one provider.
| Buy Now Pay Later | Pay Advance | |
| What is it? | Credit to pay for a purchase, usually repaid in instalments | Access to credit representing a portion of your wages, usually repaid over a short term |
| Regulation | Regulated credit under the National Credit Act since 10 June 2025, most often as a low cost credit contract | Varies by provider; some pay advance products are credit but operate under an exemption from the National Credit Act |
| Credit checks | Now required for low cost credit contracts: a credit check is mandatory, with the type scaled to the amount, and applying can create a credit enquiry on your file | Varies by provider; some don’t run credit enquiries (credit checks) as part of sign-up or applying |
| Effect on credit score | Can affect it; enquiries and missed payments may be reported to the credit bureaus | Depends on the provider; where no credit enquiries are run, and nothing is reported to the bureaus, it won’t affect your score |
| Costs | Often advertised as interest-free, but other fees can apply; total fees on a low cost credit contract are capped over a 12-month period | Usually, a fee on the amount you access, and sometimes interest; the structure varies by provider |
| What can you spend it on | Usually tied to a purchase with participating merchants | To use however you like |
| Repayments | Usually split into instalments, commonly four payments | Repaid from your upcoming pay, sometimes with options to postpone or split |
Each section below goes into a bit more detail.
How Buy Now Pay Later is regulated now
Buy now pay later used to be largely unregulated, but from 10 June 2025, that changed. BNPL products are now regulated by the National Credit Code, and providers must hold an Australian Credit Licence, be a member of the Australian Financial Complaints Authority (AFCA), and comply with responsible lending obligations.
Most Buy Now Pay Later products are now regulated as low cost credit contracts. This is a BNPL contract that keeps its fees and charges under a legislated cap, and providers of these contracts can choose to follow a modified, lighter set of responsible lending obligations rather than the full obligations that apply to other credit. In short, BNPL is now regulated credit, just under a category designed to be proportionate to its lower cost.
One practical effect of the reforms is on credit checks and credit reporting. For low cost credit contracts, a credit check is now mandatory when you apply, with the type of check scaled to the amount involved. Applying can create a credit enquiry on your credit file, and missed payments can be reported to the credit bureaus. That means how you use BNPL can now affect your credit score, in the same way other credit products can.
How does a pay advance compare
A pay advance, sometimes called a wage advance or pay on demand, lets you access a portion of your wages before your usual payday. You then repay it from your upcoming pay.
How a pay advance affects your credit file depends on the provider. Some pay advance products are credit but operate under an exemption from the National Credit Act, and some providers don’t run credit enquiries (also known as credit checks) as part of signing up or applying. Where a provider doesn’t run credit enquiries and doesn’t report to the credit bureaus, using the product won’t affect your credit score. Many of these providers assess you based on your recent bank account transactions, looking at a range of factors to determine your advance amount.
Costs
BNPL products are often advertised as interest-free, but depending on the provider, there can be other costs, such as late payment fees and account-keeping fees. Now that BNPL is regulated as low cost credit contracts, the total fees and charges on those contracts are capped over a 12-month period.
For pay advance services, costs vary by provider and usually include a fee on the amount you access, sometimes with interest. Some providers also charge fees for missed payments, while others don’t, so it’s worth checking the fee structure before you sign up.
Repayments
BNPL repayments depend on the provider. It’s common for the total to be split into four instalments paid fortnightly, though some providers offer monthly instalments or a different number of payments.
For a pay advance, repayment is usually due shortly after you take the advance. Some providers also offer flexibility, such as the ability to postpone a repayment or split it into smaller instalments, though the specifics and availability of these options vary by provider.
Why do some people choose a pay advance?
Given the similarities between the two products, a pay advance is emerging as an alternative for people who want access to funds they’ve already earned, without taking on a BNPL account. Both give you quick access to money, but they work differently, sit in different places under the law, and have different effects on your credit file.
About Wagepay
Like many Buy Now Pay Later providers, Wagepay is focused on convenient, immediate access to funds. We charge an establishment fee and interest on our wage advances, with no hidden fees or surprise charges. Our wage advance is credit, but it isn’t regulated credit under the National Credit Act, because it operates under an exemption. We don’t run credit enquiries, also known as credit checks, as part of the sign-up or application process. We simply assess your recent bank account transactions during the application process and use that information, along with a range of factors, to work out your advance amount.
Anyone can apply for a wage advance, subject to our verification and approval process. We advance a portion of your regular wage, not the full amount, up to a maximum of $3,000. Download our app or sign up through the website and apply today.
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