Visa Instalments expands into Australia’s growing BNPL market

Visa has announced the expansion of its buy now, pay later (BNPL) offering, known as Visa Instalments, to Australia.

As part of its foray into the Australian BNPL market, the payment giant has partnered with ANZ and Quest Payment Systems. This will allow Australian consumers with existing ANZ credit cards to access Visa Instalments when they’re making payments in-store or online, without taking any extra steps. Customers can view their instalment purchases, balances, and repayment information using their existing ANZ banking app.

BNPL allows individuals to purchase goods without immediate payment. Instead, users can pay for the purchase of a good later or in instalments. In the case of Visa Instalments, those repayment plans range from three to 24 months, and with 0% interest in some circumstances.

Meanwhile, participating merchants using Quest POS software that accept Visa will be able to accept Visa Instalments as a form of payment, without needing to make any software changes to enable the solution.

“We’re proud to work with our long-standing partner, ANZ on the first roll-out of Visa Instalments that has been built from the ground up — at the network level — to be deployed in-store and across ecommerce channels without the need for consumers or businesses to do anything new. Now Australians’ credit cards can buy now, pay later, too,” Visa Australia, New Zealand, and South Pacific country manager Julian Potter said.

Visa Instalments was first launched as a pilot in 2019, and has since been expanded to the US, Canada, Malaysia, and Russia.

The launch of Visa Instalments in Australia comes a week after Mastercard announced the introduction of its BNPL program, Mastercard Installments.

It also follows a fortnight after ANZ boss Shayne Elliot fronted the Standing Committee on Economics pushing for regulatory frameworks around BNPL to be introduced. He pointed out that, unlike other financial services, the sector is not bound by legal obligations despite similarities in product offerings. 

“I’ve always said there’s a place for [BNPL]. Obviously, that doesn’t mean that we need to do it … and if used appropriately, it’s a perfectly decent product,” he said at the time.

“Our concern is more to do with potential for that product to be used inappropriately and largely without regulation.

“I think it’s ironic … Afterpay, which is now owned by Square, has launched what they call retro buy now, pay later. So, something you’ve already bought, you’ve already paid for, you can change your mind, and they’ll give you credit against it.

“But apparently, according to our regulatory framework, that’s not credit, and therefore, they’re not subject to the same rules as everybody else about responsible lending.

“If I gave you an AU$200 overdraft without doing a full credit check … I’d have a breach report with ASIC. I find that’s exactly the sort of regulatory arbitrage I don’t think is helpful in the marketplace.”

In March, a new BNPL code of practice came into effect.

Developed by the Australian Finance Industry Association (AFIA), the code [PDF] is touted as being a “proactive approach to increasing consumer protections” that goes “beyond current regulatory obligations for BNPL products or services”.

Shadow Assistant Treasurer Stephen Jones said the code was the first step towards an appropriate regulatory regime for the emerging sector.

“This is a genuine attempt by the industry to set sensible and fair rules around conduct in an emerging sector of the financial services sector,” he said. “The financial services industry needs to show it has learned the lessons of the Banking Royal Commission and ensure that these code provisions are rigorously enforced.” 

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