Suncorp has joined the growing buy now, pay later trend (BNPL), teaming up with Visa to launch the interest-free offering, PayLater.
BNPL has become one of the most competitive financial products to enter the Australian market in years, with more than half a dozen options available.
AfterPay is the dominant player in the increasingly crowded market, with more than 3.4 million active accounts across the country.
PayLater is the latest to enter the market and comes with a couple of differences.
It doesn’t charge retailers any fees, which differs from many BNPL companies, who charge retailers between 4 per cent and 6 per cent to use their product.
So far, they forbid retailers from passing on that cost to customers but the Reserve Bank of Australia has indicated that they may step in to reverse that.
PayLater will also allow customers to change their repayment day up to six days after their initial purchase, and in a first in the industry, customers will be able to use a physical card to use their BNPL account.
Suncorp Bank CEO Clive van Horen said the new product was a “win” for both customers and retailers, especially in the lead-up to Christmas.
“Suncorp Bank PayLater comes with no extra costs to customers making payments, nor to businesses taking payments," he said.
"This is a win for Australian businesses who are currently paying millions of dollars in traditional BNPL fees, on top of other cost pressures.
“Eligible customers now have the option to head in store with their physical PayLater Visa debit card or to use it online via their digital wallet.”
Still like other BNPL products
PayLater will be available for purchases between $50 and $1,000, and like other BNPL products, the payments are split over four equal installments.
There will be a two-day grace period if a customer misses a repayment, otherwise there is a capped $10 late fee per purchase.
Research commissioned by Suncorp revealed customers would use BNPL for items such as televisions, Christmas presents, and clothes.
The dark side of BNPL
BNPL products have come under increasing scrutiny because of the lack of regulation in the industry. Most companies don’t perform credit checks, allowing customers access to thousands of dollars to credit.
A report from ASIC, released in late 2020, found 21 per cent of BNPL customers ended up paying late fees.
Nearly half of those were between the ages of 18 and 29.
ASIC found that 20 per cent of BNPL customers cut back or went without essentials - including meals - in order to meet their repayments on time.