Big Four bank National Australia Bank [ASX:NAB] announced it will launch its own BNPL product, entering a crowded market.
NAB follows fellow Big Four member Commonwealth Bank of Australia [ASX:CBA] in rolling out its own instalments offering.
The entry is likely to heap more pressure on standalone BNPL fintechs like Zip Co [ASX:Z1P], Splitit [ASX:SPT], and Openpay Group [ASX:OPY].
In the last 12 months, Z1P shares are down 85%, SPT shares are down 55%, and OPY shares are down 85%:
Source: Tradingview.com
NAB’s BNPL Launch Low-Down
Today NAB announced to customers that they can now sign-up for the added benefit of interest-free ‘buy now, pay later’ shopping.
Customers will be given ‘more control of their money,’ by allowing them to split a purchase into four payments for purchases less than $1,000.
The BNPL option can be exercised anywhere Visa is accepted.
NAB customers can also add the BNPL offering to their digital wallets for online and in-store purchases.
The BNPL offering comes two years after the release of NAB’s ‘StraightUp’ card, Australia’s first ever interest-free credit card.
NAB Banking Executive Rachel Slade said:
‘Hundreds of thousands of NAB customers are using instalment payment services so we’ve created NAB Buy-Now-Pay-Later to make this option simple and digital for them.
‘It’s also safer than the alternatives as these are already our customers. We know their banking and credit history and we’re assessing them based on our existing banking relationship.
‘We know the way our customers are choosing to pay is changing and they’re demanding simple and easy to understand credit.’
NAB also advised that its BNPL option will have no late fees, no interest, and no account fees.
NAB and the future for BNPL
NAB reported that there are an estimated 5–6 million active BNPL accounts in Australia, and around 45% of Australians have used a BNPL arrangement.
Likely contributing to the decision to launch the BNPL offering, NAB cited a Visa survey that found that 90% of participants were highly likely to use instalment services offered by their issuing bank.
This doesn’t bode well for standalone BNPL stocks like Zip.
If other major banks follow NAB and CBA in launching their own BNPL offerings, this may greatly impact the growth in users for standalone BNPL stocks.
Increasing sector pressure has even pushed Swedish-owned Klarna, once a big fish in the BNPL pond, to consider pulling out of the industry after 17 successful years.
NAB’s ability to assess customer credit ratings within the safety of its own relationship-built facility could turn out to be a highly valuable bonus.
Now, with interest rates rising and fears escalating about a coming recession, many investors are on edge.
However, it’s not all doom and gloom.
The current climate can still offer opportunities for the bold investor willing to go against the grain.
How can this be done?
Callum Newman, our resident veteran small-cap expert, recently released a research brief on ‘left-for-dead’ stocks that could make a comeback.
You can find out more about these ‘grave-dancer’ stocks here.
Regards,
Kiryll Prakapenka,
For Money Morning
