CBA launches its own AfterPay, Zip payment option
- 30 January, 2020 12:38
Commonwealth Bank has officially launched a digital payments service in direct competition with AfterPay and Zip, as the Australian Financial Industry Association (AFIA) announced a new Code of Practice for buy now pay later (BNPL) providers.
Commonwealth Bank launched Klarna Australia this week. Klarna, which currently operates in Europe, offers direct payments, pay after delivery options and instalment plans.
CBA has invested about $US300 million in Klarna, which will be available via its online banking app so customers can begin shopping at any online store. Purchased items will show up in the CommBank app and customers will also be able to take advantage of price drop and out of stock notifications directly from Klarna. Klarna will also be available to non-CBA consumers.
CBA has a shareholding investment in Klarna Group of 5.5 per cent. CBA and Klarna will jointly fund and have 50:50 ownership rights to Klarna’s Australian and New Zealand business. CBA also retains a right to partner with Klarna in Indonesia.
CBA chief executive officer, Matt Comyn, said its partnership with Klarna will further enhance the customer experience in its banking app and address the rapidly growing demand among consumers for new payment options.
“In particular, it allows us to build on our leading technology to deliver the very best payment services for our customers and merchants in Australia, on platforms which are safe, secure, and easy to use,” he said. “By partnering with Klarna, we are bringing together our market leading digital technology, merchant relationships and strong customer network with Klarna’s innovative payments technology and integrated shopping experience for the benefit of CBA customers and many more Australian consumers.”
According to AFIA, ‘modern day lay-by’ is used by 30 per cent of Australian adults. By launching a new Code of practice, AFIA and its BNPL members, which include Afterpay, Brighte, flexigroup, Latitude, OpenPay, Payright and Zip Co, are responding to ASIC’s Report 600 and the Senate Economics Reference Committee, which recommended such an initiative.
“The BNPL Code of Practice strengthens consumer protections for BNPL customers, while preserving customer choice to make purchases and payments in a way that suits their need,” AFIA CEO, Diane Tate, said. “Some customers want to use a credit card, some a debit card, and some a BNPL service – ease of purchases and payments and customer choice are really important, but innovation has to be matched with good consumer protections.
“The BNPL Code goes above and beyond the law by ensuring customers have strong safeguards in place that help them better understand the product and their rights. It also sets standards around helping those customers that experience financial difficulties."
Importantly, the BNPL Code also means customers of BNPL services have access to the Australian Financial Complaints Authority (AFCA), the independent external dispute resolution scheme. AFIA started public consultation in mid-January on its Code of Practice for BNPL providers and hopes to implement it in mid-2020.
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