Afterpay hoping to come up trumps with new card offering

Afterpay is hoping its loyal customer base will make some room in their virtual wallets for its own smartphone-based card offering, dubbed Afterpay Card.

Afterpay co-CEOs Anthony Eisen, left, and Nick Molnar.

Buy now, pay later market darling Afterpay is hoping its loyal customer base will make some room in their virtual wallets as it hits back at new rivals CommBank and PayPal with the launch of its own smartphone-based card offering, dubbed Afterpay Card.

Afterpay said the new product, launched on Monday, would allow customers to buy in stores by tapping the card icon in the Afterpay app, which activates the Afterpay Card in the digital wallet app through Apple Pay or Google Pay.

Customers can then pay by tapping on the payment terminal at checkout, as they would with any physical card.

“Over the past five years we have built a strong in-store offering, with tens of thousands of merchants currently offering Afterpay in-store in Australia,“ co-founder Nick Molnar said. “The new Afterpay virtual card, which will sit in a customer’s digital wallet, is an evolution of our offering, making it even easier for millions of our Australian customers to split their in-store payments in four instalments without incurring interest — ever.

“There is enormous opportunity to reach a new customer, who out of habit or preference, opts to shop in-store, to easily and seamlessly utilise Afterpay at the point of checkout.“

The executive, who this month placed at 25 in The List — Australia‘s Richest 250 with an estimated wealth of $3.2bn, said in-store sales accounted for 22 per cent of Afterpay’s overall gross merchandise volume in Australia and New Zealand.

Merchants would also benefit from the Afterpay Card, he said, as it would reduce integration efforts and costs to support Afterpay in-store.

“We are committed to continually innovating our product and find new ways to be more accessible to our customers and add increased value to our merchant partners,” he said.

The company said the card would not work as a credit product and that all orders were tested using propriety fraud and repayment capability checks.

Afterpay’s merchants pay an average of less than 4 per cent per transaction, with consumers paying no upfront fees or interest — just late fees.

“Customers then build up to a higher available balance through demonstration of on-time payment behaviour.

“Failure to make the fortnightly interest-free repayments on time will result in an immediate freeze of their account,” the company said. Shares in Afterpay have slipped in recent weeks.

The company was trading as high as $158.47 in February, but is now down to $105.89.

The Commonwealth Bank launched an assault on Afterpay this month, revealing that it will create its own buy now, pay later service, scheduled to go live later this year.

The nation’s largest bank said it would create its own BNPL service in a bid to capture a greater proportion of the emerging payment method market, which is particularly popular among millennials.

The service is available for CBA credit or debit card holders and will run through the MasterCard payments network.

This month global tech giant PayPal also announced its entrance into the increasingly competitive BNPL market, revealing its own ‘pay in 4’ offering to be launched in June 2021.