Buy now, pay later operator Zip has seen a string of new retailers join its list of partners, bringing representatives across Australia fashion, automotive and food into the fold.
Among the new retailers is the Just Group (which includes Peter Alexander, Smiggle, Jay Jays, Just Jeans, Dotti, Jacqui E and Portmans), Hanes Australasia (including Bonds and Sheridan), Lorna Jane, General Pants, Grill’d, Schnitz, and Carsales.
“[Consumers] want to own the way they pay. In turn, retailers want to offer payment choice to answer this demand, and because they recognise it drives sales. It’s a win-win,” Fran Ereira, general manager of sales and solution delivery at Zip, said.
But the already competitive buy now, pay later sector is set to become even more so, with the entrance of US provider, Splitit, in the Australian market – through a partnership with Kogan – and the arrival of Visa in the instalment payment space.
“Visa cardholders will have the option to divide their total purchase amount into smaller, equal payments over a defined time period on qualifying purchases, at the store and online or when travelling abroad,” Visa global head of issuer and consumer solutions Sam Shrauger said in a statement last week.
The announcement sent shares in Afterpay down 15 per cent – though they have since recovered.
Visa’s offer differs from existing buy now, pay later providers in that it allows issuers to leverage a customer’s existing payment account, rather than asking them to download an app or submit to a credit check.
“We expect instalments to become a foundational method of payment at checkout for both domestic and cross-border commerce payment transactions,” Shrauger said.
But the growing popularity of buy now, pay later could be its undoing. A recent report in The Australian suggests that buy now, pay later providers could soon lose one of the key advantages they have over credit card providers.
While companies like Afterpay and Zip charge retailers a fee to offer their service, they prohibit retailers from passing the surcharge on to customers. But the Reserve Bank of Australia’s Payments System Board has taken note of this practice, and is discussing “the growth in this segment of the payments market and the implications of these services for consumers and merchants,” according to a statement it released in November.
Should this restriction be changed, retailers could choose to add a surcharge to goods purchased through buy now, pay later apps, potentially changing how attractive such offers are to consumers.