Commonwealth Bank joins “Buy Now” and pays to market later with StepPay


The Commonwealth Bank of Australia (CBA) has announced that it will launch its own purchase, later pay (BNPL) platform, StepPay.

StepPay will be competing with other BNPL platforms such as AfterPay, which signed a historic $ 39 billion acquisition agreement with Square in the United States on August 3.

Existing CBA customers will be able to use the new BNPL services at retail stores and businesses that accept Mastercard and will not have access to services such as AfterPay competition.

“We are excited to be able to create the first BNPL from a major bank that can be used wherever the card is accepted,” said CBA Executive General Manager. Marcos Meneguzzi said.. “We know that BNPL is a popular option among customers, but it is hampered by its limited use and availability only by selected retailers and businesses. “

Banks have 86,000 customers pre-registered for the service, reflecting a previous study that found that more than three-quarters of existing BNPL users were interested in the BNPL service provided by the main bank. Clarified.

With BNPL, customers can purchase products in advance while paying in installments, similar to the traditional “buy now, pay later” credit card.

Epoch Times Photo
Afterpay sign at the Westfields Shopping Center retail store in Sydney, Australia, May 5, 2020. (DanielTeng / The Epoch Times)

However, these new services are different because they charge late fees instead of interest. However, most of the revenue comes from charging retailers and businesses for fairly high merchant fees.

AfterPay charges companies a flat transaction fee of 30 cents and an average of 4%. This is significantly higher than the 1-2% credit card transaction fee of a company that can also be passed directly to the customer.

With StepPay, merchant fees are the same as regular credit cards, making it a much more attractive option for businesses.

“StepPay is a win, especially for small businesses that may be charged high fees to offer BNPL to their customers,” Meneguzzi said. “Without additional merchant or integration costs, StepPay level the competition and enable businesses to become more competitive.”

However, Evans and Partners analyst Matt Wilson believed that the ability to generate sales was more important than low merchant fees, and that CBA’s entry into BNPL would fail.

“From the consumer’s point of view, we need to create a platform that resonates with the generations that use it.” Wilson said The times. “Afterpay is already there — I think the CBA missed their opportunity.”

Increasing popularity of BNPL under blockade restrictions

However, some financial experts argue that the growing popularity of BNPL may also be due to a pandemic.

In New South Wales, the seven-week blockade has been extended and demand for income support from households and businesses remains high.

Financial counselor Peter Thompson said families who are “on the verge of bankruptcy” and crave for cash are using BNPL services to prepare their meals.

“Lenders of advance payments explicitly sell to Centrelink recipients,” Thompson said. Said ABC. “These companies are targeting their demographics.”

Epoch Times Photo
People line up outside the Centrelink office on April 20, 2020 for government payments in Melbourne. (William West via Getty Images / AFP)

The Australian Securities and Investment Commission (ASIC), an industry regulator, can also cause unhealthy spending behavior for people who need to remember that the BNPL system will eventually have to pay for the purchase. Is warned.

Warrenday, ASIC’s chief operating officer, said people struggling to repay would contact their providers or consult a financial counselor.

“Most BNPL providers haven’t done a credit check so far, but frequent missed payments or late payments can affect future borrowing capacity.” Day said..

Rebecca Chu