NAB launches into BNPL with NAB Now Pay Later for existing customers

NAB has launched a new buy now, pay later service to compete in the nation’s ever-growing short-term lenders market.

NAB has launched a new buy now, pay later service to compete in the nation’s ever-growing short-term lenders market.

NAB has launched a new buy now, pay later service to compete in the nation’s ever-growing short-term lenders market.

The new service, titled NAB Now Pay Later, will allow the big four bank’s existing customers access up to $1000 to use on purchases either in-store or online with Visa merchants, which can then be paid off using four equal payments.

On the decision to develop a BNPL offering, NAB chief information officer Ana Cammaroto said hundreds of thousands of the banks customers were already accessing an external BNPL provider.

“We know from surveys that 90 per cent of customers who use a credit card have said that if a product like this was offered by their main bank, they would take it up,” she said.

“It’s been a labour of love coming across the organisation to deliver an instalment payments product very much like the ones that our customers are using more broadly. The key difference is that we offer a fully credited product with zero fees and zero interest.”

While NAB is anticipating a large take-up of the new service, NAB Now, Pay Later will not be offered to new customers, only existing customers with good credit, Ms Cammaroto said.

Unlike other BNPL offerings, NAB has incorporated the new product into its banking app, with the BNPL account to appear alongside other transaction accounts. The service, which only works with Visa merchants, is accessed with a digital debit card that will automatically change its security code to deter fraud payments.

The BNPL market has seen a lot of movement over the past couple of months since new provider FuPay became the nation’s first BNPL to successfully enter the grocery and fuel markets, striking deals with IGA, Foodworks and United Petroleum.

BNPL giant Afterpay quickly moved to ramp up its own in-store offering, with Afterpay now available to millions of customers across the country via Square payment terminals.

In an earlier move to combat BNPL, NAB rolled out the nation’s first no-interest credit card in September 2020. The move saw a number of competitor banks follow suit before later looking at BNPL offerings.

NAB personal banking group executive Rachel Slade acknowledged that “the way our customers are choosing to pay is changing and they’re demanding simple and easy to understand credit”.

“We’ve created NAB Now Pay Later to make this option simple and digital for them,” she said. “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.”

Canstar editor-at-large Effie Zahos described NAB’s BNPL offering as “essentially a revolving line of credit”.

While applauding it’s no-fee structure, Ms Zahos warned that the product could encourage poor spending habits.

“While this makes NAB’s offering stand out from the pack, a ‘free’ revolving line of credit can lead to dangerous spending behaviours, which may cause people to spend more and save less, so it’s important consumers are aware of this,” she said.

Ms Zahos said NAB would undertake a similar approach to Afterpay – which cancels a customer credit – and block a customer’s BNPL account if they miss a payment.

“We’re seeing a decline in the number of credit cards being taken out because millennials and gen Z prefer BNPL as a form of credit, which plays right into the impulses of behavioural economics – it’s easy, and right there at the front line while you’re shopping, prompting you to spend more,” she said.

BNPL products can “be the difference between putting food on the table or going without until payday for some families’, Ms Zahos said. “For other people, this could just mean an extra pair of shoes in the cupboard. It depends on the financial situation of the individual and how they handle it.”