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Visa (V) Expands Into BNPL Market Via Partnerships in Australia

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Visa Inc. (V - Free Report) has announced the extension of its Visa Installments in Australia. This will be possible through its partnership with ANZ, one of the country’s largest financial institutions, and the merchant payment provider Quest.

This alliance will allow Visa to expand its buy now pay later (BNPL) solutions in the Australia market. Shoppers will be able to avail this financing option via their existing ANZ credit cards during checkout and without any extra steps.

BNPL is a kind of financing option, which enables customers to make payments for their purchases in instalments according to the terms of the offer. This arrangement works in favor of merchants as well as shoppers. While the former can afford high value purchases by splitting payments, the latter gains from high sales.

Visa Installments was first launched as a pilot in 2019. Gradually, the solution expanded to the United States, Canada, Malaysia, Russia and now Australia.

This solution from Visa will allow participating lenders to offer a more flexible range of repayment plans from three months to 24 months with no interest in some cases to their customers.

The service is expected to take off easily in the country as a recent Visa survey found that 90% participants showed a high likelihood of using an installment option from their issuing bank and 85% confirmed that installments will improve their relationship with their card provider.

BNPL services have been a huge attraction among buyers to date, especially post COVID-19, which brought financial distress. Moreover, BNPL is favored over credit cards by the users looking to avoid steep costs and those who do not qualify for credit cards.

The BNPL is an exploding space and even though the installment payment facility has been in existence since a long time, it was earlier structured in a traditional way, carrying an interest, late payment and other additional charges. The BNPL trend got accelerated owing to trust issues in legacy financial institutions.

The new-age customers, mainly the Gen Z and the millennials, look for payment options that are easy, transparent, interest-free and dispersed via a digital medium and mobile phones. And the BNPL fits the bill to the tee.

The BNPL market is expanding rapidly. Per Worldpay’s 2020 Global Payments report, “buy now pay later” is the fastest growing e-commerce payment method, globally. In North America, the BNPL market share is expected to triple to 3% of the e-commerce payments market by 2023. In other regions, such as EMEA, “buy now pay later” already accounts for almost 6% of the e-commerce payment market and is expected to grow to almost 10% by 2023.

This vast market opportunity is attracting players and heating up competition. The same is underscored by the recent deals announced. The payments company PayPal Holdings, Inc. (PYPL - Free Report) is also dipping its toes in the sector. Another company Square, Inc. (SQ - Free Report) recently announced a $29-billion acquisition of the Australian firm Afterpay, a rival of Affirm. The major company in the BNPL space is the Swedish startup named Klarna, which holds the number one spot, followed by AfterPay and Affirm.

Recently Mastercard Inc. (MA - Free Report) announced its BNPL service named Mastercard Installments.

Visa is investing in the domain keeping an eye on the future. The company is progressing in the openbanking and crypto currency space. Embracing new technological changes in the industry is imperative to stay relevant in the same. Visa is ticking the right boxes to fuel growth over the long term.

Visa currently carries a Zacks Rank #2 (Buy) and has gained 3.6% year to date against the industry’s decline of 16.4%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 


 


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