The Commonwealth Bank’s new buy now pay later product, StepPay, went live today with CBA no doubt hoping plenty of its 4 million customers will give the app a crack.
More than 86,000 CBA customers had pre-registered for it after the idea was announced in April.
This is CBA’s first outright BNPL, and sits alongside two similar offerings. The bank has also poured $300 million into Swedish BNPL giant Klarna for a 5% stake (an investment now worth $1.3bn) as well as launching a no interest Mastercard that mimics a BNPL option.
StepPay mimics the highly successful Afterpay model on several fronts. With Square hoping to buy ASX-listed Afterpay for $39 billion, the pioneering BNPL is already achieved a third of CBA’s market cap in just seven years. Afterpay (ASX: APT) shares are down around 0.5% today on the news of StepPay, while shares in rival Zip (ASX: Z1P) are up 1.4%.
The new BNPL’s pitch is it can be used anywhere Mastercard is accepted. It has an initial limit of up to $1,000 and offers four fortnightly instalments for transactions higher than $100. There are no ongoing fees, but a $10 late fee is charged for missed instalment repayments.
It’s available to eligible CBA customers, and links to their existing bank account with a digital card, the bank’s first offering without a physical card.
No extra merchant fees
CBA’s Executive General Manager, Marcos Meneguzzi said StepPay offers the same accessibility as the bank’s other cards.
“We’re excited to create the first BNPL from a major bank which can be used anywhere our cards are accepted. We know BNPL is a popular choice among customers, but is hampered by its limited use and availability in only selected retailers and businesses,” he said.
One way CBA is hoping to make inroads against Afterpay, which CEO Matt Comyn has campaigned vigorously against on the regulatory front, is StepPay’s appeal to merchants. Rival BNPLs charging up to 6% in merchant fees on sales – a cost the RBA is currently preventing merchants from passing on to customers in the name of competition.
Marcos Meneguzzi said creating “a responsible BNPL” with robust criteria to approve customers based on specific eligibility and credit assessments.
“While we expect it will have great appeal among customers, it will only be available to eligible customers so we can offer the most responsible option we can,” he said.
“StepPay is a win particularly for smaller businesses who may be charged a high fee in order to offer BNPL to customers. With no additional merchant costs or integration costs, StepPay levels the playing field and allows businesses to better compete,” he said.