The Commonwealth Bank of Australia (ASX: CBA) share price is rising after the bank announced its own buy now, pay later: StepPay.
CBA StepPay – the new buy now, pay later offering
The biggest ASX bank has launched its own buy now, pay later (BNPL) offering called StepPay.
Commonwealth Bank’s customers can download and start using StepPay straight away once it is activated online.
StepPay will be available anywhere that CBA cards are accepted. Over 86,000 customers have already pre-registered for StepPay. CBA said this demonstrated the appeal of a bank-offered BNPL.
The bank pointed to research that showed 76% of Australians who currently use BNPL are interested in using a BNPL service offered by their main bank.
StepPay will link with an eligible CBA bank account, with no ongoing fees and no additional costs to businesses. Only standard merchant fees apply.
The initial limit will be up to $1,000. It can be used for everyday spending of less than $100. If the purchase is higher than $100, it will be split into four fortnightly instalments. But there will be late fees of $10 per missed instalment repayment. But there are caps in place to minimise the amount of additional fees charged.
It’s not available for cash advances or gambling, and won’t be available for customers in arrears of hardship.
Who will be eligible for this?
CBA said that StepPay would apply “robust criteria” to approve customers based on specific eligibility and credit assessments. They must show evidence of regular income or deposits into a CBA transaction account, as well as pass internal and external credit assessments.
Summary thoughts on this for the CBA share price and the BNPL sector
Klarna is offering a introductory deal for merchants. CBA is saying it’s not going to cost merchants any more than the normal merchant fee. I’m not sure if this product is going to be material for CBA, but more competition doesn’t seem good news for players like Zip Co Ltd (ASX: Z1P) and Afterpay Ltd (ASX: APT).
There are other ASX growth shares that I’d rather think about which are generating good profit growth and not facing such huge competitors.