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NAB launches ‘buy now, pay later’ with no late fees

NAB sign and people shopping
If you don't make your repayments, NAB will block your buy now, pay later' abilities. (Source: Getty)

NAB has launched a ‘buy now pay later’ (BNPL) option that it claims will not hit customers with late fees, account fees or interest.

The bank will allow customers to spend up to $1,000 via a virtual credit card embedded in their app and then let them pay the money back over four fortnightly instalments.

To make sure customers can manage the repayments, the bank will conduct a quick credit check based on their banking and credit history.

“This will ensure customers can have the confidence to appropriately manage their repayments, both today and in the future,” NAB Group executive personal banking Rachel Slade said.

If the customer fails to make their repayments on time, the bank will block a customer’s BNPL account so they can’t make more purchases with debt.

The bank will then contact the customer to provide options to help them to get back on track.

Customers will not be able go into a negative balance on their BNPL account.

The payment product will be able to be used anywhere Visa is accepted, both online and instore, and there will be no minimum purchase amount.

The ‘NAB Now Pay Later’ function will be integrated into the app and will appear alongside other NAB products like transaction accounts.

When customers activate the instalment payment function in the app, the credit check will be completed.

“In the time it takes for a customer to go from the fitting room to the register, we’ve assessed their application, undertaken a credit check and opened an account with a virtual card so they’re ready to purchase,” Slade said.

“We’re able to do this quickly because of the combination of technology and knowing our customers,” she added.

The “virtual card” will also feature biometric fraud detection and a dynamic CVV that refreshes regularly to protect customers from fraud and theft.

According to Canstar’s editor-at-large and money expert, Effie Zahos, NAB’s new offering is essentially a revolving line of credit that consumers pay nothing for, apart from the purchase cost.

Zahos said the absence of late fees was a positive step because one of the biggest gripes with BNPL was that people were charged late fees instead of interest.

“While this makes NAB’s offering stand out from the pack, a ‘free’ revolving line of credit can lead to dangerous spending behaviours, which may cause people to spend more and save less, so it's important consumers are aware of this,” she said.

“NAB does a credit check on all customers who apply, so it’s essentially BNPL with parameters.

“Not all customers will be approved, and their limit will be assessed individually.

“Likewise if they're late on a payment, NAB will block their BNPL account to prevent further overspending, so there are safety barriers in place.”

The move makes NAB the second major bank to move into the BNPL space, with the Commonwealth Bank of Australia launching its BNPL service ‘StepPay’ in 2021.

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