Australia’s largest buy now, pay later provider, Afterpay, has launched its own banking platform, Money by Afterpay.
The platform includes transaction and savings accounts via its new Money app, which also includes a person’s buy now, pay later account. The platform does not yet include other credit products, however, Afterpay has plans to launch mortgages next year.
On the savings account, Afterpay is offering 0.75 per cent with no requirements to qualify for this rate. However, this rate is only available on balances up to $50,000, (previously slated to be $15 million).
A feature in the new app is Afterpay Retro, which allows banking customers to pay for purchases they’ve already made, of up to $200, in four instalments.
So how does it stack up against the competition?
Afterpay savings account – how it compares
- 0.75% is the current Afterpay Money savings interest rate.
- 0.26% is the average big four bank conditional savings rate.
- 1.35% is the highest ongoing savings rate from ING available to all Australian adults.
- 2.50% is being offered by Westpac and BOQ to young adults.
- Afterpay Money has no monthly terms and conditions to earn the max interest, whereas most market-leading savings accounts do.
|Account||Max ongoing rate||Max deposit||Monthly conditions for max rate|
|Afterpay Money||0.75%||Up to $50k||None|
|Big four banks (average)||0.26%||No limit||Make one deposit and no withdrawals.|
|Highest ongoing savings rate for all adults|
|ING||1.35%||$100,000||Grow savings bal/mth, deposit $1K+ in linked account, make 5+ purchases/mth. No conditions for under 18.|
|Highest ongoing savings rates for young adults|
|Westpac Life||2.50%||$30,000||Grow savings balance each mth and 5+ purchases/mth with linked account.|
Source: RateCity.com.au Note: Big four accounts are the average of their goal saver accounts. Terms and conditions for max rate differs slightly between the big four banks. Max deposit listed is the maximum you can put in and still get the highest rate listed.
Afterpay transaction account – how it compares
- Afterpay Money doesn’t charge standard fees, however, late fees may apply.
- The big four banks charge fees for currency conversion and overseas ATM withdrawals. CBA, Westpac and ANZ also charge account fees in some cases.
- Only ING waives all standard fees and refunds third party ATM fees in Australia and overseas, if terms and conditions are met.
|Account||Account keeping fees||Currency conversion fees||Domestic ATM fees||International ATM fees||Notes|
|Afterpay Money||$0||$0||No fee charged by own bank, however ATM provider may charge a fee.||No fee charged by own bank, however ATM provider may charge a fee.||Rewards points.|
|Big four banks (average)||$3.50||3%||No fee charged by own bank, however ATM provider may charge a fee.||Up to $5 from own bank, plus ATM provider may charge a fee.||Some banks may offer discounts to customers.|
|ING||$0||2.5%||No fee charged by own bank, third party fees refunded.||No fee charged by own bank, third party fees refunded. See notes.||Rebate on electricity bills of up to $100 per financial year.|
To qualify for fee waivers, terms and conditions apply
|HSBC||$0||$0||No fee charged by own bank, however ATM provider may charge a fee.||No fee charged by own bank, however ATM provider may charge a fee.||Holds up to 10 foreign currencies, 2% cash back on tap and pay capped at $50 per month.|
Source: RateCity.com.au. Note to qualify for the ING benefits each calendar month, deposit at least $1,000 and make 5+ settled card purchases. From 1 December 2021, free ATM withdrawals is limited to 5 per month.
Playing a game of cat and mouse
RateCity.com.au research director, Sally Tindall, said Afterpay was playing a game of cat and mouse to compete with the banks.
“The banks have bulldozed their way into the buy now, pay later sector, so it makes sense for Afterpay to do the same to the banks,” she said.
“The pioneer and leader in the buy now, pay later space is now joining the lucrative world of banking, although it’s kicking off with a limited range of products that’s yet to include home loans.
“Despite having no hoops to jump through, Afterpay’s savings account has a lukewarm rate of 0.75 per cent. There are 18 banks offering ongoing savings rates that are higher than this, if you meet their terms and conditions.
“Retro finally lets Afterpay customers use buy now, pay later at any store rather than just affiliated retailers. However, it’s only for purchases of up to $200 and customers need to pay the purchase upfront, then request instalments,” she said.