PayPal brings its 'buy-now-pay-later' offer to crowded Australia

Sydney

PAYPAL will launch its "buy now, pay later" (BNPL) option in Australia this June, the US payments giant said on Wednesday, muscling in further on Afterpay and others for share in the booming industry.

So far PayPal's new BNPL option has been rolled out in the United States and Britain where by the end of the December quarter it said it had handled more than US$750 million of transactions.

The US payments giant now plans to bring its interest-free "Pay in 4" service to its more than nine million customers in Australia, where regulation of the fast-growing space is thin compared to other consumer finance categories, while adoption is higher than other markets.

The arrival of PayPal presents a serious new competitor for Afterpay and Zip Co Ltd, who lead the domestic market, as well as Sweden's Klarna which is backed by a small shareholding from Australia's largest bank.

Andrew Toon, the general manager of payments at PayPal Australia, told Reuters the company had been "inundated" with requests from Australian merchants and businesses after the offshore launch of its BNPL service last year.

PayPal planned to capitalise on its long-standing relationships with Australian merchants but not to the point of seeking exclusive arrangements that would muscle out other BNPL providers, Mr Toon said.

The company's initial announcement last year that it would join the BNPL sector raised concerns among investors and analysts that its deep network with retailers and lower merchant fees might eat into the incumbents' growth.

"The big question is whether (PayPal) gain incremental sales as in a potentially different customer base, or do they simply take share away from incumbents," said Steven Ng, the co-founder and senior portfolio manager at Ophir Asset Management, which owns Afterpay shares. REUTERS