Australia’s Largest Lender Supports Afterpay and PayPal to Buy Now, Pay Later

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The Commonwealth Bank of Australia on Wednesday became the country’s first major lender to offer its own “buy now, pay later” (BNPL) service, attacking US payment giant PayPal and Afterpay with the promise of lower fees.

The move paves the way for a race to register buyers and stores in a country that is home to many of the world’s largest providers of BNPL financing, as door-to-door orders sent more people to shop online.

Australia’s Big Four have recognized BNPL’s growing popularity, but none have yet entered the space with their own service.

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CBA, Australia’s largest bank, is expected to launch the service in the middle of this year, coinciding with PayPal’s entry into a market where BNPL regulation is thin and adoption is high.

The lender’s new finance service will split payments into four installments every two weeks with a limit of AU $ 1,000 and will be available alongside Klarna, a Swedish payments company in which CBA has a small stake.

The bank was also involved in Klarna’s recent fundraising round, which is rumored to be considering a U.S. stock exchange listing.

“We have developed a close collaboration with CBA in a much appreciated partnership over the past year and we continue to focus on growing this offering,” Klarna said in a statement to Reuters.

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The ABC said it would only charge the “standard merchant fees” it charges for credit cards. BNPL providers such as Afterpay typically charge merchants around 4%.

“Unlike other BNPL providers who may charge high fees, there is no additional charge for businesses when customers choose to pay with BNPL from CommBank,” said Angus Sullivan, CBA group director for retail banking services.

Afterpay was not immediately available to comment on the CBA’s entry, while No.3 lender Westpac Banking Corp declined to comment.

Afterpay is expected to launch partnered savings accounts with No.3 lender Westpac in the second half of the year.

($ 1 = A $ 1.2940) (Reporting by Nikhil Kurian Nainan and Shashwat Awasthi in Bangalore and Byron Kaye in Sydney; edited by Rashmi Aich and Arun Koyyur)

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In-depth reporting on The Logic’s innovation economy, presented in partnership with the Financial Post.

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