Interest fee

NAB enters crowded BNPL market with zero-fee NAB Now Pay Later

National Bank of Australia. Source: AAP/Mick Tsikas.

National Australia Bank (NAB) is the latest bank to join the Buy Now Pay Later (BNPL) stack, with its new NAB Now Pay Later rolling out in July 2022.

The difference with competing offers is its zero-fee model. That means no interest, no account fees, and most importantly, no late fees. Merchants will also not need to register to offer NAB Now Pay Later, as NAB relies on the existing Visa credit card payment system.

This is potentially good news for merchants and consumers: NAB Now Pay Later can be used anywhere Visa is accepted, both online and in-store, giving users more choice and saving merchants the burden of fees. additional.

Businesses that already accept Visa transactions will not be required to pay any additional fees to NAB, however, they will pay the 1-1.5% transaction fee you already pay for credit card transactions.

While the Australian BNPL market appears to be oversaturated, the NAB Group Director for personal bank Rachel Slade says “hundreds of thousands of NAB customers use installment payment services, so we created NAB Now Pay Later to make this option simple and digital for them.”

NAB also cites a Visa investigation which found that 90% of respondents were very likely to use a payout option from their issuing bank.

The product, which will allow users to pay for purchases of up to $1,000 in four semi-monthly installments, will be available to customers with individual NAB transaction accounts and the latest version of the NAB app, who are over the age of 18 years old and pass credit checks. .

Users can apply to use the product through the NAB app, and if the criteria is met, they will be able to use the product within minutes of applying.

NAB Now Pay Later follows NAB’s StraightUp, an interest-free credit card the company launched in 2020 that was NAB’s most popular new credit card in the past year.

Industry Battles

There is at least 5 to 6 million active installment payment accounts in Australia already, with 45% of Australians using an installment payment product. While there is no doubt that BNPL has grown in popularity, the BNPL sector is not without problems and challenges.

A recent CPA survey found that Australian small businesses lag their mainland Asian counterparts in technology adoption, including a general reluctance to offer new digital and payment technologies like Apple Pay and Afterpay. The survey found that 39.4% of small businesses in Australia were unlikely to offer such payment methods, compared to 0.1% of small businesses in mainland China.

CPA highlights the low short-term returns that small Australian businesses can earn by adopting and investing in new technologies. With standalone BNPL giants like Afterpay charging commission rate transaction from 4 to 6%on top of the $0.30 transaction fee, it’s no surprise that nearly 40% of small businesses are hesitant to sign up.

While BNPL’s popularity with clients shows no signs of waning, with consumer groups call for better regulation (currently BNPL has no consumer protection and is self-regulated), stock price plummetsbig names like Afterpay report gargantuan losses, and higher interest rates making borrowing more expensive, it may become more difficult for autonomous players to compete with banks.

As McLean Roche Managing Director Grant Halverson said The GuardianBNPL-only operators are likely to face “massive squeeze” given that banks have “huge muscle and can handle the increased funding costs”.