PayPal Offers Credit Card to Australian Customers
(15 June 2021 – Australia) PayPal is offering a credit card to its 9.1 million Australian users despite falling debt in the face of buy now, pay later (BNPL) competition and behavioural shifts underway by younger customers.
PayPal will enter the over-the-counter retail fray targeted by BNPL operators such as Afterpay and Zip following the groups own competitor in the BNPL space in Q1 2021. Credit card balances have been in decline since 2008 however the trend accelerated through COVID with banks’ credit card portfolios contracting by a fifth as customers paid down outstanding debt and reduced discretionary spending. The Reserve Bank of Australia (RBA) published its latest merchant payments data this month confirming the value of credit card debt accruing interest remains in a firm downtrend, while the total number of accounts has fallen by almost one million since June 2020.
PayPal’s new card will be issued by Citi, which announced in Q2 2021 it was selling its Australian retail banking division.
“Credit cards will remain a key payment option for many consumers, and PayPal sees a clear opportunity in the rewards card segment. There has been a decline in cards, but the proportion of payments accounted for by credit cards is broadly unchanged since 2013, and reward schemes had not evolved over this period” commented PayPal Australia’s General Manager of Payments, Andrew Toon.
“There’s been de-leveraging. So we’ve seen card numbers come down and balances come down, but what we’re saying is that that the proportion of consumer payments being made with credit cards is the same today as it was in 2013” Toon added.