By Stuart Condie
SYDNEY--Afterpay Ltd. will launch its banking product in Australia in October as the country's largest buy-now-pay-later provider seeks to further grow and engage its user base amid fierce competition.
The ASX-listed company on Tuesday said it will launch its Money app following a pilot among local staff. Afterpay is the first partner firm on Westpac Banking Corp.'s digital banking platform, with the lender holding deposits as first announced in October.
Afterpay said balances would attract a 1% annual interest rate. There is no overdraft facility and the account is linked to a customer's regular Afterpay installment payment account.
The product allows users to access up to 15 savings accounts in a move that could bolster Afterpay's long-standing position that it is a budgeting tool rather than a spending mechanism that should be regulated in the same way as traditional credit.
Australian regulators are increasingly monitoring the buy-now-pay-later industry amid concerns of unsustainable spending by some consumers and impacts on merchants whose contracts stop them from passing on the cost of the product.
"Money will broaden our relationship with our loyal customers and also attract a new group that's looking to streamline how they manage their finances within the debit economy, further cementing our commitment to supporting responsible spending," Co-CEOs Anthony Eisen and Nick Molnar said in a filing to the ASX.
Afterpay had 3.5 million users in Australia and New Zealand at the end of the March quarter, most of them in Australia. User growth in Afterpay's home region was just 9% on-year, compared with 112% in the U.S., where it launched more recently.
U.S. payments giant PayPal Holdings Inc. last week launched its buy-now-pay-later product in Australia, where Afterpay already competes with rivals including Zip Co. Ltd. and Humm Group Ltd.
The product is not designed as a revenue driver, Afterpay Executive Vice President, New Platforms, Lee Hatton said. Ms. Hatton said the intention is to increase loyalty and engagement among younger users, with what she said is the under-served female market a particular focus.
"Paying for things with Afterpay, it's not something that you use every day," said Ms. Hatton, who was Chief Executive of National Australia Bank Ltd.'s UBank subsidiary from 2015-2020. "This is a chance to manage your money every single day and that's our intention."
Westpac is the regulated deposit account and card issuer. Afterpay said it has also obtained an Australian Financial Service License from the Australian Securities and Investments Commission, which allows it to provide general financial product advice and distribute basic deposit products and debit cards.
Ms. Hatton said Afterpay was focused on successful delivery in Australia before looking to other global markets, each of which she said is very different.
Write to Stuart Condie at firstname.lastname@example.org
(END) Dow Jones Newswires