CBA (ASX:CBA) share price higher on StepPay BNPL launch

CBA has entered the BNPL arena…

| More on:
Investor looking at smartphone and considering Evolution's share purchase plan

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price is pushing higher on Wednesday.

In morning trade, the banking giant's shares are up 1% to $100.05.

Why is the CBA share price pushing higher?

Today's rise by the CBA share price appears to have been driven by an announcement relating to the bank's buy now pay later (BNPL) aspirations.

This morning the bank announced the launch of its Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) rival, StepPay, which is available to up to 4 million CBA customers.

StepPay, which can be used anywhere MasterCard is accepted, allows shoppers to make four easy, fortnightly instalments for transactions higher than $100. There are late fees of $10 per missed instalment repayment, with caps in place to minimise the amount of additional fees charged.

Positively for merchants, there are no additional merchant fees above standard service fees.

CBA's Executive General Manager, Marcos Meneguzzi, commented: "We're excited to create the first BNPL from a major bank which can be used anywhere our cards are accepted.  We know BNPL is a popular choice among customers, but is hampered by its limited use and availability in only selected retailers and businesses. With StepPay, customers have freedom around where they'd like to shop, offering the same accessibility as our other CBA cards."

Strong signups

The bank advised that over 86,000 customers have already pre-registered for StepPay, which it feels shows the appeal of a bank offered BNPL solution.

But this could soon grow. The bank notes that research indicates that 76% of Australians who currently use BNPL are interested in using a BNPL service offered by their main bank. This could bode well for the bank and also the CBA share price if the service takes off.

"StepPay is a win particularly for smaller businesses who may be charged a high fee in order to offer BNPL to customers. With no additional merchant costs or integration costs, StepPay levels the playing field and allows businesses to better compete."

"Creating a responsible BNPL is at the forefront of StepPay's design. And while we expect it will have great appeal among customers, it will only be available to eligible customers so we can offer the most responsible option we can," Mr Meneguzzi concluded.

The CBA share price is now up almost 20% since the start of the year.

Motley Fool contributor 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 and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Guess which ASX 200 share Goldman Sachs says is a buy

The broker doesn't think Trump will spoil the party for this stock.

Read more »

A happy girl in a yellow playsuit with a zip gives the thumbs up
BNPL shares

Is this why the Zip share price keeps breaking records?

Zip shareholders have been enjoying a record breaking year. Is this why?

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in November

These quality stocks are top picks in November according to the broker.

Read more »

A female stockbroker reviews share price performance in her office with the city shown in the background through her windows
Share Market News

5 things to watch on the ASX 200 on Friday

Another good session is expected for Aussie investors today. Here's what is happening.

Read more »

A middle-aged man working from home looks at his mobile phone with a laptop open on the table in front of him.
Share Market News

Here's why more Australians intend to work during retirement

A new survey reveals insights into the retirement intentions of older Australian workers.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

Are we soon to see a skyrocketing Aussie stock market?

Will the Aussie stock market follow the lead of American stock markets following the US election?

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a volatile, but positive, day for ASX shares this Thursday.

Read more »

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price
Record Highs

Xero and 2 other ASX tech shares cracking all-time highs on Thursday

The price peaks follow a significant lift in the NASDAQ overnight following Republican Donald Trump's US election victory.

Read more »