The move is interesting on two fronts. Firstly, the posterchild and early fintech innovator seems to be going backwards in embracing a plastic card.
PayPal’s new credit card goes against the grain
This is happening at a time when credit card usage is falling and younger consumers are shunning that method of payment.
Data released by the Reserve Bank of Australia (RBA) this week showed a 29% decline in the value of goods purchased with a credit or charge card.
How PayPal could be pressuring the Afterpay share price
Secondly, PayPal’s move could put pressure on the Afterpay share price. The only offering Afterpay has is Buy Now Pay Later (BNPL) while competitors have a wider range of products, reported the Australian Financial Review.
Don’t cut-up your credit card just yet
PayPal recently launched its own BNPL product and its move to plastic is in response to user demand, it said.
The online payment giant has 9.1 million active Australian users. PayPal found that many of them want a credit card. Demand is especially strong for cards with no annual fees and a rewards program that can be used on a wide range of options, according to the AFR.
“There is no silver bullet when it comes to payments,” the AFR quoted Andrew Toon, general manager of payments for PayPal Australia. “We are focused on delivering a one-stop payments shop.”
Taking on ASX banks at their own game
He added that many credit card users have been left with frequent-flyer points that cannot be used due to COVID-19 border restrictions.
But the PayPal card will hold points in a digital wallet and these can be redeemed via discounts at 300,000 Australian merchants on its platform.
But PayPal isn’t the only one that’s inventing new payment channels for Australia. Qantas Airways Limited (ASX: QAN) is also striking deals to extend the reach of its frequent flyer program. The AFR reported that home loan providers like Symple Loans have signed up.
Borrow big and get a free flight! Fingers crossed this doesn’t come crashing back to earth.
Meanwhile, CBA reported that its no-interest credit card, Neo, accounts for 30% of all credit card applications at the bank. And this number is growing to 40%.
The old-fashion credit card might just be coming back into vogue.