The instalment service is free for customers, because the four-instalment construct is being treated by CBA and Mastercard as a credit card rather than a debit card payment. This will allow CBA to earn more in ‘interchange’ fees, which are set by Mastercard but paid to CBA as the issuer of the digital card by a merchant’s bank.
Mastercard has determined the interchange fee for the new buy now, pay later card will be 80 cents for every USD 100 of transactions – 10 times the 8 cents CBA receives for Mastercard debit transactions.
CBA’s interchange earnings of 80 basis points for StepPay transactions is 40 times more than it would receive when an Eftpos debit card is used, which earns issuing banks around 2 cents every USD 100 transaction.
Like credit cards, CBA will conduct lending checks on customers before offering them the USD 1000 line of credit.
Around 100,000 Commonwealth Bank customers who pre-registered for its new buy now, pay later product StepPay will be able now to load the new card into their digital wallets.
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