PayPal will enter the Australian credit card market next month, when it launches the PayPal Rewards Card – a Visa card issued under a white label arrangement with Citigroup.
The offer includes an uncapped rewards program with an earning rate of one point per A$1 of spend. There is no annual fee.
The rewards points can be redeemed online through the PayPal Checkout at 750,000 businesses globally, including 300,000 business in Australia, “or applied to a recent PayPal Rewards Card purchase to offset the cost”.
The interest rate on revolving balances is 20.99 per cent.
PayPal said in a media release that consumers still want rewards programs. The company has 9.1 million customer accounts in Australia, where it has operated since 2005.
PayPal is showing faith in the credit card market, despite its steep decline in Australia over the past few years.
The latest APRA banking data shows falls in credit card balances of as much as 35 per cent over the two years to April and only a handful of credit card issuers reporting an increase in their balances.
Among the big banks, Westpac has had the biggest decline, with its credit card balance down 28.8 per cent over two years.
ANZ’s credit card book is down 24.6 per cent, CBA’s is down 22 per cent and NAB’s 27.9 per cent.
Andrew Todd, general manager of payments at PayPal Australia, said: “There’s no silver bullet option that’s preferred by all Australians, so we want to ensure that however customers prefer to pay, they can choose to do it with PayPal.
“We know that more and more Australians are using BNPL products, which will include PayPal ‘Pay in 4’ very soon, but RBA data shows credit cards account for 19 per cent of all consumer payments, which is the same share as in 2013. That’s a significant proportion of our customers that we want to ensure we’re accommodating.”