A long-awaited paper outlining three options for the buy now pay later sector has been released.

The Australian government aims to have a proposed model up and running next year.

One proposed regulatory change could see the Credit Act amended by Treasury, which would need BNPL providers to check that a product is not affordable to a person, before it is offered to them.

This would mean that players in the sector would not be required to obtain a credit licence.

Buy Now Pay Later giant AfterPay has thrown its support behind this model, while smaller rival ZipCo wants the reforms to go even further.