Available only to eligible Commonwealth Bank (CBA) customers, the new buy now, pay later (BNPL) service will be linked to CBA bank accounts and can be used anywhere debit and credit card payments are accepted.

This follows last week's announcement by PayPal that it too would be entering the BNPL space, and will compete with BNPL provider Klarna, which is backed by CBA.

“Customer needs are evolving and this new BNPL offering is about giving customers more choice around how they choose to pay and when, depending on the option which suits them best,” said CBA’s Group Executive Retail Banking Services Angus Sullivan.

“When making a payment, customers will have additional flexibility to use it for their everyday spending for smaller purchases as well as split over four instalments to help smooth payments for bigger purchases."

The bank's BNPL offering will be a digital card that can be added to the CommBank app or digital wallet on your smartphone, and customers can use this digital card to tap and pay in-store and shop online anywhere Mastercard is accepted. 

Here's how CommBank BNPL will work:

  • Like other BNPL platforms, purchases over $100 will be split into four equal fortnightly instalments. 
  • For purchases under $100, the full amount will come out of the linked CommBank account in one go. 
  • No interest charges, monthly or annual fees apply. 
  • Late fees of $10 apply per missed instalment repayment. Caps are in place to minimise the amount of additional fees charged.
  • A limit of $1,000 applies.

CBA said it will not charge retailers a fee to accept the BNPL instalment payments.

“Additionally we know transaction costs are important considerations for businesses.  Unlike some other BNPL providers which may charge a high fee, there are no additional fees to businesses when customers choose to pay with CommBank’s BNPL,” Mr Sullivan said.

CBA said it will also conduct credit checks on customers to make sure users can afford the deferred repayments, unlike some other BNPL rivals. 

“As the leading digital bank in Australia, we believe we are best placed to offer our customers a prudent and responsible BNPL option based on the trends and insights sourced from real time transaction data over many years,” Mr Sullivan said.

Eligible CBA customers will be able to apply for the BNPL product where they show evidence of a regular salary deposited into a CBA transaction account which can cover repayment instalments.

CommBank BNPL will only be available to customers following internal and external credit assessments.

How does CommBank's BNPL offering stack up against other providers?

The move by CommBank reflects increased competition in the BNPL space.

The two biggest players in Australia are Afterpay and Zip with almost 6 million customers between them, as well as Humm which also claims more than two million active users. 

Smaller providers include Bundll, Laybuy, Openpay, Klarna, and Splitit, which have also launched over the last few years.

So how does CommBank's BNPL product stack up against existing BNPL providers?

CBA

Afterpay

Zip Pay

PayPal ‘Pay in 4’

Humm

Klarna

Bundll

Laybuy

Openpay

Interest charged?

No

No

No

No

No

No

No

No

No

Late fees

$10 per missed repayment

$10 late fee per missed repayment

$5

One-off $10 late fee for purchases up to $125.

For purchases over $125 a $10 late payment fee applies for each missed repayment, capped at $30

$6

Between $3 and $15 per instalment depending on total order value

None

$10 per missed repayment

$9.50 and $3.95 processing fee

Credit limit

$1,000

$1,500 per transaction

$1,000

$1,000

$30,000

$

$3,00

$1,200

$17,000

Account fees

None

None

$6

None

$8

None

None

None

None

Credit check

Yes

No

Yes

Yes

Yes

Yes

No

Yes

Yes

Image by Commonwealth Bank