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.
