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Westpac has announced that it will launch a new, zero-interest digital credit card called Flex later in 2021.
The card will allow customers to access $1,000 credit with no interest on purchases, no late payment fees, and no foreign currency fees.
However, they will be charged a flat $10 monthly fee if they do not repay the amount owing from the previous month on time.
The card does not include cash advances or balance transfers.
Customers can choose repayment frequency of once or twice monthly, and can repay a minimum of $40 monthly or the full amount owing for each statement period.
Customers will be able to apply for the card via mobile banking or online if their application is approved. The digital card will be issued within a few minutes via the banking app or mobile wallet, while access to a physical card is optional.
Card spend, repayments, and reminders will be managed through online banking, and the card verification code (CVC) will automatically change every 24 hours for additional security.
Repayments are automatically direct debited from the account nominated by the customer during their application.
Customers will receive payment reminders via SMS and the Westpac Live in-app message service.
If customers have missed a minimum repayment, they will not incur a late fee but their card will be suspended until they make that minimum repayment.
Those who make payments on time and front of wallet could be provided with access to Westpac Rewards and extras.
The Flex card is currently being piloted and will become available to customers later in the year.
It can be used anywhere Mastercard is accepted, in-store and online (this excludes cash advance and gambling transactions), and is available for use via the digital wallet.
At the same time as conducting this pilot program, Westpac has released research, which has showed that 37 per cent said they believe traditional credit cards are no longer as relevant (this increases to 53 per cent and 48 per cent of Gen Z and Millennials respectively).
Three-quarters of the respondents said they believe continued growth of digital and online banking has made them more conscious of their spending habits as they can see their money more easily.
The survey of 2,038 Australians aged 18 and over conducted by Lonergan Research also showed that almost nine in 10 agreed it was easier to conduct everyday banking tasks through digital channels.
In addition, Gen Z are more likely to use mobile to complete their banking tasks than any other generation (Gen Z 85 per cent, Millennials 77 per cent, Gen X 58 per cent, and Boomers 20 per cent).
Meanwhile, 57 per cent of respondents said regular reminders would assist them to better manage repayments (driven by Gen Z at 75 per cent, Millennials at 68 per cent, Gen X at 56 per cent and Baby Boomers at 37 per cent).
Nearly half (47 per cent) said they wished there were more banking products available that could help them better manage their cash flow.
Commenting on the digital card, Westpac chief executive consumer and business banking Chris de Bruin said: “Flex has been designed to meet the changing needs of younger customers who want greater control over their finances and are more likely to use their smartphone to manage their money.
“The Flex application process will use real time, digital data assessment to review a customer’s financial position to make sure they can meet their repayments. Through using this technology, we have the ability to assess a customer’s financial position quickly while at the same time taking steps to ensure we are lending responsibly.”
Mr de Bruin also said that the card would cater to the “on-demand” generation “who want convenience and control, without the complexity”.
Last year, National Australia Bank (NAB) introduced the “first” no-interest credit card in response to competition from the buy now, pay later sector.
Shortly after, the Commonwealth Bank of Australia (CBA) launched its no-interest credit card called CommBank Neo.
[Related: CBA launches BNPL offering]
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