Australians with an Afterpay buy now and pay later account will also be able to do their daily banking and save with fintech, starting in October. We take a look at how the Afterpay savings rate compares to what is currently offered by traditional banks and whether your money will be safe.
Ten months ago, Afterpay announced that a new partnership with Westpac was on the horizon which would allow its three million plus customers to request Afterpay-branded savings and transaction accounts directly through the provider Buy. Now Pay Later (BNPL).
On Tuesday, Afterpay revealed more details about the smooth launch of âMoney by Afterpay,â which is a mobile finance app primarily aimed at Gen Z and Millennials. Customers will be able to view and manage their accounts. savings and transaction supported by Westpac through this app, once it launches publicly in October.
What is money through Afterpay?
Money is an upcoming mobile app from Afterpay that will show a customer’s buy-now balance, upcoming orders and payments due, as well as details of their new daily spend and savings account. These transaction and savings accounts are expected to launch to the public with the app from October. Afterpay staff got first access to the app starting July 20.
The savings account
The savings account will have a 1% interest rate on balances up to $ 1 million, with no strings attached to earning the full rate. As with most savings accounts, Afterpay notes that the 1% rate is subject to change, however. Customers will be able to open up to 15 different savings accounts. The accounts would all be held on Westpac’s balance sheet, as it has a deposit license and Afterpay does not.
Interestingly, Canstar’s database shows that the maximum that an adult banking directly with Westpac could typically earn on a savings account would be just 0.40% at the time of writing. 18-29 year olds who meet certain eligibility criteria could earn up to 3% interest on their savings in a Westpac Life account.
Looking at Canstar’s database, around 38% of savings accounts are similar to Afterpay’s, in that they don’t have any requirements to earn an ongoing bonus rate or promotional rate. .
The highest rate of the unconditional savings account to earn ongoing interest on Canstar’s database is currently the Macquarie Bank Savings Account at 0.95%. It is followed by Volt at 0.90%, Qudos Bank at 0.60%, Arab Bank Australia at 0.50% and Great Southern Bank, MOVE Bank and Teachers Mutual Bank at 0.40%.
The highest savings account rate with no age limit in Canstar’s database is available from Rabobank Australia and ING, where clients can earn up to 1.35%. But these rates come with other conditions, as the Rabobank high interest savings account rate is only available for the first four months before dropping to 0.25%, and the Maximizer ING savings requires clients to increase their balance, deposit at least $ 1,000 with an external bank. account and make five card purchases each month, otherwise the rate drops to 0.05%.
The transaction account
Afterpay customers will be able to open a transaction account in the Money app. The account will come with a physical debit card, digital wallet offers and the ability to make real-time payments.
According to Afterpay, no fees will be charged to customers and features will be introduced to help customers make âmore informedâ spending and savings decisions.
Just as Westpac is the issuer of the savings account, the big bank will also be the authorized card issuer for the transaction account.
Is it safe to bank with Afterpay?
The money customers store in savings and transaction accounts will be secured and protected by a federal government guarantee of up to $ 250,000, thanks to Westpac’s license as an authorized deposit-taking institution ( ADI), while the client side will effectively be handled by Afterpay. .
Afterpay’s adventure in banking is made possible by Westpac’s 10X Bank-as-a-Service platform, launched in November 2019, which essentially opens a backdoor for fintechs to provide full banking services, but with the added security of a major banking brand, as well as its license and banking systems.
While Westpac will be the regulated deposit and card account issuer, Afterpay was granted an Australian Financial Services License (AFSL) earlier this year from the Australian Securities and Investments Commission (ASIC) to enable it to provide general advice on financial products and distribute basic deposit and debit card products.
According to Australian Financial Review, Afterpay hopes the launch of transaction accounts will result in increased spending on its buy now pay later offer, with plans to add investment and retirement options on the trail.
As we reported earlier, accessing customer transaction data could give Afterpay additional information about their customers, such as whether a person is creditworthy and whether there are other financial products than they do. can sell to them in the future.
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