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CBA to launch buy now, pay later platform – how it stacks up against Afterpay
Since publishing, the Federal Government of Australia has announced its decision to regulate the BNPL industry under the National Consumer Credit Protection Act. As a result, BNPL providers in Australia will soon be required to comply with Responsible Lending Obligations and hold Australian Credit Licences. The new regulations may also impact the way BNPL services operate by introducing credit checks for individuals signing up for these services in the future. Additionally, to promote transparency in credit services and safeguard consumer interests, the government plans to prohibit BNPL providers from automatically raising credit limits for customers who have not requested it.
CBA has today become the first big four bank to create its own buy now, pay later platform.
Launching in mid-2021, ‘CommBank BNPL’ will be available anywhere Mastercard is accepted for purchases over $100 with a total borrowing limit of $1,000.
Unlike market leader Afterpay, CBA will take a more comprehensive look at a potential customer’s finances, including a credit check, before approving them.
The platform will only be available to eligible CommBank customers who deposit their regular salary into a CBA transaction account.
CBA’s announcement comes just a week after payments giant PayPal revealed it was also entering the Australian buy now, pay later market.
How new players CommBank BNPL and PayPal ‘Pay in 4’ compare to market leader Afterpay
(CBA and PayPal to launch in mid 2021)
| CommBank BNPL | PayPal 'Pay in 4 | Afterpay | |
| Interest charged | No | No | No |
| Account fees | None | None | None |
| Credit check | Yes | No | No |
| Individual purchase price | $100 - $1,000 | $50 - $1,500 | Up to $1,500 |
| Max credit limit | $1,000 | Determined on case-by-case basis | $2,000 |
| Where you can use it | Anywhere Mastercard is accepted. | Anywhere PayPal is accepted. | Affiliated retailers. |
| Payment plan | 4 instalments over 6 weeks. | 4 instalments over 6 weeks. | 4 instalments over 6 weeks for new customers. |
| Late fees | $10 per missed payment, capped at $120 per year. | $10 for purchases under $125. $10-$30 for purchases over $125. | $10 per missed payment, plus $7 if not paid within 7 days. Late fees capped at 25% of the purchase price or $68, whichever is lower. |
RateCity.com.au research director, Sally Tindall, said: “The buy now, pay later market is heating up faster than Sydney property.”
“The number of big names piling on is indicative of the strength of Australia’s buy now, pay later sector,” she said.
“This new offering from CBA is likely to erode some of Afterpay’s businesses, however, is unlikely to eclipse it.
“To get access to the platform you need to deposit your salary into a CBA account, which could be all too much effort for people who bank elsewhere, especially when there’s easier BNPL options on the table.
“CBA is in a unique position to properly assess a customer’s ability to pay back their buy now, pay debt, and has developed a platform with the most comprehensive checks we’ve seen so far.
“CommBank BNPL has a relatively low credit limit of $1,000. It cuts off customers when they skip a BNPL payment, and also if they’re late making a credit card or home loan repayment with the bank.
“CBA has now set the bar for banks entering into this sector. It will be interesting to see if Afterpay, when they start white labelling Westpac products, will have the same checks and balances.
“Australia’s largest bank is extending its tentacles across the buy now, pay later sector. It has a zero per cent ‘Neo’ credit card, a stake in Klarna and soon its own buy now, pay later platform.
“This new platform is likely to appeal to existing CBA customers who want to test out buy now, pay later in an environment they trust.
“At some point, Australia’s love affair with buy now, pay later may slow down, but with so many heavy hitters now in the mix, we might have a way to go yet,” she said.
Key BNPL services available in Australia – excludes personal loan payments plans.
| BNPL provider | Where you can use it | Payment schedule | Borrowing limit | Account fees | Late fees | |
| CommBank BNPL | Anywhere Mastercard is accepted | 4 instalments over 6 weeks. | $1,000 | None | $10 per missed payment, capped at $120 a year. | |
| Afterpay | Affiliated retailers | 4 instalments over 6 weeks
(8 wks for ppl who pay on time). | $2,000 | No interest or monthly fees. | $10 per late repayment and an extra $7 if you don’t pay in 7 days. Max fee 25% or $68 whichever is lower. | |
| PayPal
“Pay in 4” | Anywhere PayPal is accepted | 4 instalments over 6 weeks | Total amount varies per person. | No interest or monthly fees. | $10 per late payment, capped at $30 | |
| Zip Pay | Anywhere + BPAY | Flexible repayment schedule (weekly, fortnightly or monthly) provided you pay a min $40 / mth. | $1,500 | $6/mth if you have money owing. | Late payment fee of $5 after 21 days of not paying the minimum. | |
| humm (Little Things) | Use at affiliated retailers as well a majority of BPay billers. | 5 or 10 weekly or fortnightly instalments | $2,000 | $8 monthly fee charged on payment plans 5 months or greater. | $6 for each late payment | |
| Klarna | Use in most stores via the Klarna app (excludes supermarkets). | Pay in 4 fortnightly instalments. Can extend for 10 days as a one-time courtesy. | $1,000 | Up to $7 fee to extend for 2 weeks (dependent on purchase price). | $3 - $15, depending on purchase price, per late payment. Max fee is $45. A grace period is provided. | |
Note: CBA and PayPal platforms are launching mid 2021.
Disclaimer
This article is over two years old, last updated on March 17, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent credit cards articles.
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Product database updated 28 Nov, 2024
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