Insights

Is the new CBA BNPL service bad news for Afterpay and Zip shares?

Commonwealth Bank of Australia (ASX: CBA) is launching a BNPL service. Is this bad news for Afterpay Ltd (ASX:APT) and Zip Co Ltd (ASX:Z1P)?
The post Is the new CBA BNPL service bad news for Afterpay and Zip shares? appeared first on The Motley Fool Australia. –

Young man looking afraid representing ASX shares investor scared of market crash

On Thursday Commonwealth Bank of Australia (ASX: CBA) announced plans to take on Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) with the launch of its own buy now pay later (BNPL) service.

According to the release, the banking giant’s BNPL offering will begin rolling out to eligible CBA customers from mid-2021 and be able to be used anywhere debit and credit card payments are accepted.

The service closely resembles the Afterpay product for shoppers. It allows them to make fortnightly instalments for transactions and comes with a limit of $1,000.

However, the service differs for merchants, as it carries no additional merchant fees above the standard merchant service fees. Whereas Afterpay and its peers also take a cut of the transaction as well.

CBA’s Group Executive, Retail Banking Services, Angus Sullivan, commented: “When making a payment, customers will have additional flexibility to use it for their everyday spending for smaller purchases as well as split over four instalments to help smooth payments for bigger purchases.”

“Additionally we know transaction costs are important considerations for businesses. Unlike some other BNPL providers which may charge a high fee, there are no additional fees to businesses when customers choose to pay with CommBank’s BNPL,” Mr Sullivan said.

Is this a threat to Afterpay and Zip?

The addition of another major player in the industry appears to have some investors concerned. Especially one with such deep pockets and a large customer base.

However, analysts at Goldman Sachs aren’t fazed by the news. It explained:

“While the headline would suggest competition is intensifying we do not believe it is likely to materially impede on APT’s market position. APT’s 3.4mn customers are transacting on average 18x per annum (1H21 annualised trends). And while merchants may benefit from a lower transaction cost, APT has likely aggregated a user base that is possibly different to the user base that CBA may appeal to. We also note that recent launches of Klarna and NAB no-interest credit cards have yet to have any noticeable impact on APT’s growth relative to our forecasts.”

In light of this, the broker has made no changes to its estimates or rating. It continues with its neutral rating and $127.60 price target on Afterpay’s shares.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the new CBA BNPL service bad news for Afterpay and Zip shares? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!