NAB enters the buy now pay later world

The BNPL phenomenon is growing
Source: Getty

If you’ve ever bought anything online, you’ll be familiar with BNPL, which stands for: buy now, pay later. Once dominated by AfterPay, the latest institution to join the BNPL phenomenon is the National Australia Bank. They are the second of the Big Four Australian banks to announce plans to offer a BNPL product to customers, after CBA.

Buy Now Pay Later has become an extremely popular payment option for Australians, particularly millennials so it isn’t surprising that the big banks are now getting in on the action. In Mozo’s 2021 BNPL report, 33% of people said it was their go-to payment method for purchasing goods and services.

What is BNPL?

As the name suggests, BNPL is a type of short-term financing that allows consumers to make purchases and pay for them at a future date.

How does BNPL work?

BNPL is similar to the ‘layby’ system. Layby is where you pay for a purchase in instalments and receive the item once it’s paid off. With Buy Now Pay Later, you receive the item straight away, and then pay it off over time in instalments interest free.

With most BNPL platforms you’ll set up an account with them and not the store you purchase the goods through. Unlike a credit card, you generally don’t have to pay interest, as long as you make your repayments on time and in full. If not, then you could be hit with a late fee.

So, how is NAB’S BNPL scheme different?

The NAB BNPL option will be available via their existing Visa credit card system. This means that you will be able to use it wherever Visa is available. With other BNPL platforms like Afterpay and Zip, you need for the store or website that you want to purchase goods through to have the BNPL provider as one of their accepted payment options.

In addition to this, NAB has said it will not charge account fees, or late fees and it won’t set a minimum purchase amount.

When will NAB’s BNPL be available?

The bank will offer its BNPL product from July of this year. You can currently register your interest via the NAB website.

Are there any restrictions to NAB’s Buy Now Pay Later?

There will be a $1000 account limit. You will also need to pass a repayment assessment when you apply.

Is there any other criteria to qualify for NAB’S BNPL?

You will need to be at least 18 years of age and you must also have an individual NAB transaction account and have the NAB app installed.

How is NAB’s BNPL option different from the NAB’s straight up card?

There are a few differences. If you want a higher account limit than $1,000, then the Straight Up card could be a better option as it has $2,000 and $3,000 limit options, however there is a monthly fee attached (while you carry a balance) which is either $15 ($2,000) or $20 ($3,000). The straight up card also doesn’t charge foreign transaction fees so if you want to travel or shop at international stores this could save you money as the standard NAB Classic transaction account has 3% foreign exchange commission.

If you’re in the market for a BNPL service that suits your needs, here are Mozo’s 2022 Choice Award Winners.