The struggling buy now, pay later sector will be regulated in the same way credit is in Australia.

“This should not be controversial,” Assistant Treasurer Stephen Jones told a Responsible Lending and Borrowing Summit in Sydney today.

“If it walks like a duck and quacks like a duck, it’s a duck.

“So let’s have an end to the silly argument about whether BNPL is credit and get on with the next stage of growth for this emerging industry.”

The government will then consult industry, consumer groups and regulators to mark up how the sector is regulator in Australia.

“BNPL products are unique and any future regulatory framework needs to reflect that,” Jones said.

“We will take a careful and deliberate approach that balances the need to protect consumers with encouraging innovation in our financial services industry.

“However, we must be mindful of the risks that may arise from innovation and ensure our regulatory frameworks remain fit for purpose in light of evolving technologies and business practices.”

It comes as Klarna’s valuation crashes 85 per cent, in line with other recent value drops for the likes of Block, Zip, and Sezzle – the latter two of which cancelled a planned merger due to the fast changing situation.

In March, the Australia Finance Industry Association issued a code of practice for the industry, which is voluntary.