CBA - BNPL Disruptor

CBA's BNPL announcement is a sign of things to come for the BNPL sector worldwide.

Globally, banks will pick the eyes out of this nascent business by targeting customers with low credit risk and leave the high risk customers, those with a bad history, to other operators. They will also give more competitive terms to select merchants and pick up the high volume trade.

Combine that with their ability to fund their loan book at lower cost and it's obvious that the writing is on the wall for start-up one-trick-pony BNPL operators from afterpay and zip down who will be given the flick by merchants including easystore as soon as a better offer comes along.

Start-ups will need their own e-commerce network and a grassroots ground game with a workforce of agents and operatives, ie an ecosystem of undertakings, to survive and prosper.

The other big risk for the sector is that BNPL start-ups will be under the gun if interest rates rise leading to a credit crunch. I don't see interest rates rising worryingly any time soon, but it is a risk.