Splitit is not worried by the threat of Reserve Bank to allow surcharging to its BNPL providers.
Unlike Afterpay, and its other rivals, Splitit already allowed its merchant customers the option to pass the cost of its installment-based service to its customers
Brad Paterson, Splitit's new chief executive, said, “We actually don’t prohibit surcharging. In markets where that is allowed, such as Australia, given we operate on the payments networks, we don’t prohibit that. It’s up to the merchants to decide.”
The difference between Splitit and Afterpay is that the former uses the available credit on a customers' existing credit card to secure the full value of the transaction, with customers paying the monthly installments.
The whole idea of Buy Now Pay Later service is that it is free to customers, and merchants are the ones who pick up the cost, which is at least 6% of the purchase price.
Mr.Paterson, further added, “What we’ve seen on the payments system in my time at Visa and PayPal is that in markets where it’s not highly competitive those merchants will surcharge, in markets where it is highly competitive, they won’t.”
The former chief executive of retail banking and payments consultancy McLean Roche Consulting, Mr.Grant Halverson, pointed out other challenges faced by BNPL providers, like the growth of sales on buy now, pay later platforms in Australia and New Zealand had slowed by two-thirds in 2019.
Source: Sydney Morning Herald
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