Citi Australia wants in on the burgeoning buy now, pay later market and is launching a new installment loan product with Kogan that will swap flat rates for interest rates, The Sydney Morning Herald reported on Sunday (Aug. 18).
Following in Afterpay’s footsteps, the leader in “buy now, pay later” payments, Citi is forming a partnership with online retailer Kogan.com to let existing credit card customers switch to installment loans at the point of sale (POS).
The fee will be calculated as a percentage of the purchase price, ranging from 0.5 percent to 5 percent, depending on the loan’s length.
Choong Yu Lum, Citi’s head of cards and loans, said the buy now, pay later sector is hot, and the bank is planning to let more merchants have access to the offerings.
“We think that a lot of the big four are trying to race towards participating in the space of buy now, pay later,” Lum said.
Citi’s research shows customers would feel better using a buy now, pay later plan through a traditional lender, the article said.
“The buy now, pay later sector has seen rapid growth, increasing five-fold in the last two years alone, according to data from ASIC [Australian Securities & Investments Commission],” Lum told The Sydney Morning Herald. “This highlights that consumers want more ways to manage their payments, and we’re proud to be the first bank in Australia to enter this sector.”
The news follows an announcement earlier this month by Commonwealth Bank that it would be Klarna’s exclusive partner and invest $100 million. Klarna is an Afterpay rival in the U.S.
Credit card giant Visa said in June it was also planning to get into the buy now, pay later landscape. Its goal is to bring installment lending to the POS in both the digital and physical spaces using application program interfaces (APIs).
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