Buy now, pay later juggernaut Afterpay has released details of its new banking products due to launch in October. However, with around 100 banks to choose from in Australia, will Afterpay be able to win customers over?
Afterpay Money will offer fee-free transaction and savings accounts in its new app, which will provide customers with an overview of their spending and saving.
Customers will need an Afterpay buy now, pay later account to apply but the bank accounts will be managed by Westpac, with Afterpay acting as the distributor.
|What Afterpay Money will provide||What the app won’t include|
|Transaction account||Home loans (incl offset and redraw facilities)|
|Savings accounts (up to 15)||Credit cards|
|Summary of Afterpay BNPL purchases||Other loans|
|Budgeting and savings tips||Summary of other BNPL platform purchases|
Note: other features may be added later.
RateCity.com.au has analysed Afterpay Money’s new transaction and savings accounts and compared them to what’s already on offer.
Afterpay savings account – how it stacks up against the competition
- 1.00% is the current Afterpay Money savings interest rate.
- 0.35% is the average big four bank conditional savings rate.
- 1.35% is the highest ongoing savings rate from ING available to all Australian adults.
- 3.00% is being offered by Westpac and BOQ to young Australians, Afterpay’s current target market.
- Afterpay Money has no monthly terms and conditions to earn the max interest, whereas most market-leading savings accounts do.
Afterpay transaction account – how it stacks up against the competition
- Afterpay Money won’t charge customers fees, however, fees can be charged by third parties.
- 8 banks don’t charge any standard fees (account, domestic/overseas ATM, currency conversion fees). Most banks don’t charge account keeping fees.
- Only ING waives all standard fees and refunds third party ATM fees in Australia and overseas, if terms and conditions are met.
- The big four banks charge account fees for currency conversion and overseas ATMs. CBA, Westpac and ANZ also charge account fees in some cases.
RateCity.com.au research director, Sally Tindall, said: “Afterpay has a strong brand and more than three million Australians already on their books, but it’s entering a crowded market, dominated by four incumbents with deep pockets.”
“It’s hard to see this new money app blowing the big banks out of the water,” she said.
“A savings rates of 1 per cent is likely to attract customers, particularly with no hoops to jump through to qualify. However, Afterpay’s rate is still significantly lower than the 3 per cent its partner Westpac is offering young Australians.
The company says its new money app will provide “a single, seamless view” of a person’s finances.
“With access to just three products – savings, transaction and buy now, pay later – the app is likely to fall short of being a one-stop shop for many customers.
“Afterpay makes most of its money from merchant fees so its modus operandi is to keep people spending. It will be interesting to see how it weaves the saving lessons in,” she said.
Afterpay savings account vs. the competition
|Max ongoing rate||Max deposit||Monthly conditions for max rate|
|Afterpay Money||1.00%||Up to $15M||None|
|Big four banks (average)||0.35%||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|
(ages 18 – 29)
|3.00%||$30,000||Grow savings balance each mth and 5+ purchases/mth with linked account.|
|Bank of Queensland
(ages 14 – 24)
|3.00%||$10,000||Deposit $200+/mth & make 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.