Citi Australia (Citi) has announced that its ‘interest-free’ buy now, pay later (BNPL) product will go live in October under a new brand, Spot..
As previously reported, the bank is launching the new proposition to enable customers to pay for goods up to the value of $1,000 using the digital card, which can then be repaid in four fortnightly instalments.
For purchases of $200 or more, customers will also have the option to pay a $10 flat fee to break the payments into eight smaller fortnightly payments, should they so wish.
Repayments can be made from any bank account in the customer’s name.
Issued by Citi’s affiliate entity Diners, Spot. will be accepted wherever Mastercard is accepted (either locally or overseas) and can be linked to any deposit account.
Unlike credit cards, the product will not charge customers any interest.
However, late fees will apply for missed payments.
Consumers and merchants can pre-register their interest in Spot. from this week, before it goes live in October (online and via the Citi mobile app if they are a Citi customer).
It marks the latest initiative from Citi as it prepares to sell its consumer banking arm in Australia.
‘Could lead to a worldwide rollout’
Commenting on the new BNPL offering, head of cards and loans at Citi Australia Choong Yu Lum said: “We are excited to enter the buy now, pay later market with an offering that will be compelling for customers and merchants.
“This is a global first for Citi, and we’re confident that success in the Australian market could lead to a worldwide rollout of the new payment method.”
Surin Fernando, vice president of business development, digital and innovation for Mastercard in Australia, added that providing consumers and retailers with choice in how to pay and get paid “has never been more important” as payment preferences and behaviours continue to change.
“With Spot. Buy Now Pay Later, Citi is taking full advantage of Mastercard’s market-leading payment network and instalment technology to offer its customers more flexibility while still benefitting from the same widespread acceptance, safety and security they’re used to when paying with their Mastercard card.”
The growing interest in BNPL payment offerings come amid a growing uptake and interest in BNPL usage in Australia.
According to ASIC’s report 672, BNPL arrangements rose by 90 per cent between the 2017-18 and 2018-19 financial years alone, when the number of BNPL transactions hit 32 million.
Moreover, research conducted for Citi in September 2020 found that while the majority (98 per cent) of Australian credit card holders were aware of major BNPL services, only a quarter had actually used them.
“How Australians use credit is evolving, and there remains an opportunity for new players to step in and listen to consumers who are sending a clear message they want innovative payment solutions to help them manage their finances,” Mr Lum said.
“While some may have the perception that buy now, pay later tools are the domain of young Australians purchasing fast fashion, this view is outdated, and this payment method has much greater appeal across demographics and purchasing categories,” he added.
“Spot. Buy Now Pay Later will stand out in this growing market as a solution for consumers as it solves existing pain points,” he said.
One of the largest players in the BNPL market, Afterpay, announced this week that it had entered into a scheme implementation deed with Silicon Valley-based digital payments company Square Inc.
Expected to close “in the first quarter of calendar year 2022”, subject to shareholder, regulatory and court approvals, the deal would see ASX-listed company be fully acquired by the San Francisco payments fintech in a deal worth approximately $39 billion.
It will be the largest acquisition deal in waiting and one of the largest acquisition deals in Australian history.
The announcement led to the S&P/ASX 200 Index opening at 7,449.7 on Monday (2 August), its highest opening level on record and went on to gain 90.90 points to 7,483.50, setting a new 100-day high.
Find out more about Citi’s proposition and hear a business update from the lender in this upcoming webcast, hosted by our sister brand, The Adviser.
[Related: Citi to launch BNPL ‘card’]