Australia’s buy now, pay later industry has become much more competitive, with buyers now able to choose PayPal’s offering over local incumbents like Afterpay, while tech giant Apple plans to add BNPL to its mode. payment by mobile phone.
With US giant PayPal having nine million active accounts in Australia, its Pay in 4 service which launched here on Wednesday looks certain to take a substantial share of the burgeoning BNPL market, given that these consumers won’t need to. request the credit department. .
The company claims that the service, which launched in the United States last year, incurs no interest, late payment fees, and registration fees, with only currency conversion fees potentially applicable to customers. international purchases.
It is touted as the only BNPL service in Australia to offer no late fees.
When a buyer pays using the standard PayPal “button”, it will appear at checkout in their PayPal wallet as a payment option.
“Our main driving force is to make the PayPal wallet the most versatile and useful digital wallet available by providing more payment choices and flexibility to our customers while maintaining the highly secure processes they know and trust. “said Andrew Toon, general manager of payments for PayPal Australia.
Macquarie Research said that PayPal offering no late fees was an important step in encouraging adoption of the service.
âIn the event of a missed payment, Afterpay and PayPal would suspend the user’s account,â Macquarie Research said.
âThe recovery of missed payments, however, is treated differently.
âAfterpay will send texts and emails, but eventually write off the bad debt, while PayPal will send the debt back to a third-party debt collector.
âIt remains to be seen whether this debt treatment would weigh on consumers’ decision to waive late fees. “
Meanwhile, Bloomberg reports that Apple plans to launch a competing service, known internally as Apple Pay Later, which will be available as an option on Apple Pay.
Macquarie Research said it was understood that the feature would not be linked to Apple Card but should be linked to other credit cards available on Apple Pay “and is therefore more of a direct competitor to Splitit than other BNPL products. , which do not require a credit card “.
Splitit weighed in.
âWe see Apple joining the BNPL industry as positive news for Splitit as it will help accelerate the acceptance of installments as a payment option around the world,â said Managing Director Brad Paterson.
âApple’s solution offers new financing to consumers and as such is more competitive with other consumer finance providers.
âWe consider its solution to be complementary to Splitit, which allows buyers to make better use of the existing credit on their credit cards.
âApple gives us another opportunity to sit alongside it as an alternative option, or to partner up to improve its offering and provide a low-risk way to expand the retail categories it serves and its average order value, as we recently did with BNPL, Tabby. “
Shares of Australian BNPL providers fell on the news, with Splitit falling 4.5% to 53 cents.
Local market leader Afterpay fell 9.59% to $ 107, while Zip plunged 11.38% to $ 7.32.
Macquarie Research said it had previously counted on Afterpay losing market share in Australia amid the growing competitive landscape provided by new entrants including PayPal, CommBank’s StepPay and Citi, the latter two failing to yet been launched.
RateCity’s research director Sally Tindall said PayPal’s existing large customer base in Australia meant Afterpay would get its money’s worth.
âWith millions of people to market and with a new no-cost proposition, this new platform is likely to be a serious competitor in buy now, pay later,â she said.
âHowever, PayPal customers who default on their refund should be aware that if you default, it could end up on your credit report.
“The big question is whether PayPal’s new service will make people switch purchases now, pay suppliers later, or encourage them to use multiple platforms at the same time.”
With over 20 BNPL services currently in the Australian market, clients could easily rack up a multitude of debt on a number of platforms, Tindall warned.
âASIC’s most recent industry report found that people with issues with buying now, paying later were more likely to have multiple accounts,â she said.
Expert observers expect a period of consolidation – mergers and acquisitions – within the increasingly crowded industry.