Zip gains retailers as buy now pay later comes under attack

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.

Comments

2 comments

  1. David gray posted on October 18, 2019

    Brilliant concept and business model well sujted to the times !! People are sick of the flagerent overcharging of interset on credit cards hence the industry is dying a slow death . Zip aftetpay etc will continue to show expinential returns for investors , be careful of negative media hype about the industry they have a brilliant product growing exponentially !!! RIP Credit Cards for every dog has its day !!!!!

  2. david gray posted on November 6, 2019

    BNPL will continue to grow what we are witnessing in the media is a pay for play attack on bnpl sector which has directly affected trading prices . Credit cards are now a relic of the past the bnpl sector is booming and will continue to boom the future is here. Credit card providers are scrambling to retain a customer base however there goods are viewed as toxic due to the debt trap of there interest rates .Now is the time to invest in the bnpl sector as the gains over time will be very impressive ....the future is here thanks to companys like afterpay and zip .

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