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CommBank takes on Afterpay: How does its buy now pay later stack up?


CommBank is adding a new buy now pay later service for customers. So how does it match up to Afterpay and other options?

Available to CBA customers from mid-2021, CommBank BNPL will link with an eligible bank account and let you set up BNPL for transactions between $100 and $1,000.

Unlike Afterpay, you'll be able to use it anywhere Mastercard is accepted, with a virtual card that's set up in the CommBank app or your digital wallet. When you use it, your purchases will be paid off in four fortnightly instalments, taken from your linked CommBank account.

You'll also be able to use CommBank BNPL for purchases that are less than $100, but in that case, the total amount you spend will be taken out of the linked account in one go.

If you're already using Afterpay, here's a snapshot of how the two compare based on the available details for CommBank BNPL.

FeatureAfterpayCommBank BNPL
Account fees$0$0
Spending rangeShown in app$100 to $1,000
Payments4 fortnightly instalments4 fortnightly instalments
Late payment fee$10, then $7 if no payment is made in the next week$10
Late payment fee cap$10 for purchases under $40, 25% up to a max of $68 for purchases over $40.CBA will charge a late fee of $10, which it said would be capped at $120 over a year.
Where you can use itOnline and in-store with businesses that offer Afterpay.
(Finder analysis shows there are 35,851 brands offering Afterpay).
Online and in-store anywhere Mastercard is accepted.
Credit check detailsNot usually completed and repayments are not recorded on your credit report.A credit check will be needed to get approval for CommBank BNPL, with the bank saying it "will only be available to customers following internal and external credit assessments".
Cost for businesses$0.30 per transaction plus a 4-6% commission feeNo extra costs

While the table gives you a snapshot of how they compare side-by-side, let's unpack some of the key differences.

Spending range

Afterpay has the potential to give you more than the maximum $1,000 offered by CommBank BNPL. The Afterpay website says spending limits start at $500 and "increase gradually over time if you are proven to be a responsible spender". That gives you more scope if you want to pay for big-ticket items in instalments.

Where you can use it

This is where CommBank BNPL has an advantage over Afterpay: you can use it wherever Mastercard is accepted. That means you're not limited to Afterpay partner stores. It also gives you more scope to use BNPL for any overseas shopping you do online.

Business fees

CommBank made a point of saying its BNPL offering wouldn't cost businesses any more money (on top of their usual overheads). It noted in the release that average BNPL costs to merchants are around 4% of each transaction and adds up to "hundreds of millions of dollars a year". At the moment, this doesn't really affect you as a shopper, but it could be good for business owners.

When you can use it

The other really big difference between Afterpay and CommBank BNPL is that you can use Afterpay right now. It takes a few minutes to get an account and make your first purchase. With CommBank BNPL, you have to wait until it's rolled out in "mid-2021" (no specific date has been announced yet). You also need to be a CommBank customer to use it.

But CommBank isn't putting all its eggs in one basket. The Big Bank has two other options that compete in the BNPL space:

  • Klarna. Anyone over 18 can use Klarna for buy now pay later spending. It's offered at over 200,000 retailers and has a maximum spend of $1,000. CommBank has a 5.5% stake in Klarna, which is available on its own or through the CommBank app.
  • CommBank Neo. This is a no interest credit card that charges a monthly fee when you use it. Unlike Afterpay or other BNPL options, you can choose how much you pay off the card – you just need to meet the minimum monthly repayment of $25 or 2% of what you owe (whichever is worth more). It also offers credit limits up to $3,000.

When it announced the launch of the new BNPL offering, CommBank said it "reinforces the bank's commitment to reimagining its products for its customers".

"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," CBA group executive for retail banking services, Angus Sullivan, said in a statement.

Bottom line

CommBank BNPL looks like it will be a decent alternative to Afterpay and other BNPL options. But if you're happy with your Afterpay account (or another BNPL option), there's no real reason to switch.

Picture: Getty Images

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