Zip Pay and Visa partner up – why this is big news
You can now use Zip anywhere Visa is accepted as well as through Apple Pay and Google Pay.
The new partnership between Zip and Visa gives you a way to set up a virtual card for your Zip account. You can then use the card to tap and pay (or Tap & Zip as the feature is called) instead of using an actual Visa credit card or debit card.
You can also add this virtual Zip card to your Apple Pay or Google Pay account and then choose to use Zip for any mobile payments. This includes any subscriptions you've set up through Apple Pay or Google Pay.
These changes set Zip apart from other buy now pay later services. Other services typically charge businesses a fee to offer this payment option, which has resulted in where you can use buy now pay later services being more limited than, say, where you can use a regular debit card or credit card.
But the space is rapidly changing to keep up with competition. Today is a great example. As well as Zip's announcements about Visa, Apple Pay and Google Pay, Afterpay has also announced a new partnership with Westpac. Both Zip and Afterpay have seen their shares soar as a result.
This shows there is fierce competition among buy now pay later services, which also extends to credit cards.
In fact, in a statement about the launch of Zip & Pay in partnership with Visa, Zip co-founder and CEO Larry Diamond says it "completely changes the game, enabling Zip to compete with the credit card at every checkout in Australia".
But credit cards are also adapting
In 2020, we have seen the launch of a new type of credit card that directly competes with buy now pay later by offering no interest ever and a monthly account fee.
The only one of these cards you can currently apply for is the NAB StraightUp. It charges a monthly fee based on your credit limit: $10 for a $1,000 limit, $15 for a $2,000 limit and $20 for a $3,000 limit. This fee is charged for each month you use the card. If you don't use the card and don't have a balance, you won't have to pay the monthly fee.
This structure is similar to Zip Pay, which charges a $6 monthly fee when you're paying off a balance.
The repayments are also similar. With the NAB StraightUp card, your minimum monthly repayments also depend on your credit limit and range from $35 to $110.
For example, if you had a $1,000 limit, your minimum monthly repayment would be $35, including the monthly fee.
If you had the same limit for a Zip Pay account, your minimum monthly payment would be $40 and the $6 monthly fee would be added to your account balance each month (after the first month) until it is paid off.
It's worth noting that Zip Pay and the NAB StraightUp card have other features and potential costs you'd need to consider, but they are similar enough that it's useful to compare them side-by-side.
What does this mean for you?
Changes to buy now pay later services mean you have another option at the checkout, and now that includes any checkout where you can use a Visa card, Apple Pay or Google Pay.
The way banks and credit card providers are responding with new partnerships, no interest monthly fee cards and instalment plan options is also giving you more ways to pay.
Ideally, this should mean you have payment options that fit with how you earn and spend your money. But it also makes it important to compare the different options and keep track of your money so that you know you're getting a deal that works for you.
We updated this story on 21 October 2020 to clarify that Zip Pay is always interest-free.
Want to know more? You can read up on buy now pay later options in this guide, get the lowdown on no interest monthly fee credit cards or head straight to our side-by-side analysis of buy now pay later vs credit cards. If you're keen to keep track of your money, get the Finder app so you can see all your accounts in one place, plus tips on how to save.