Westpac ends BaaS agreement with Afterpay

Westpac Group has ended its Banking as a Service (BaaS) collaboration agreement with Afterpay, following the latter’s acquisition by Block Inc.

The banking giant and buy now, pay later service provider had first formed a partnership in 2020, which enabled the two companies to take advantage of each other’s offerings.

The partnership led to Afterpay Australia launching its Money by Afterpay app, which leverages Westpac’s Banking as a Service (BaaS) solution to provide users with savings accounts. It offers users a physical debit card, a digital wallet offering and gives users access to make and receive real-time payments (via the New Payments Platform). It was also considering to expand into a mortgage offering, too.

However, following Afterpay’s acquisition by Block Inc. earlier this year, the fintech announced last week it was to withdraw its money management app offering in Australia.

An Afterpay spokesperson commented that it had ceased accepting customers as of last Friday (26 August) and would fully close the app on 10 October. 

“Afterpay will shift its focus to integrated opportunities within the Block ecosystem, while continuing to play a central role in the lives of its Australian customers with its BNPL offering,” the spokesperson said.

Lee Hatton, the lead for Money by Afterpay, said she was “really proud” of the work the group had done with the Westpac team to “model a completely different approach in the Australian market that was firmly focused on the needs of our customers”.

“Our decision to move in this new direction is due to our exciting next chapter with Block, particularly as we think about Cash App opportunities here in Australia, and we wish the Westpac team and its growing list of BaaS customers continued success,” she said.

Westpac said that it would “support Money by Afterpay customers to transfer funds to accounts of their choice,” noting that “competitive offers” would be available to these account holders if they wanted to stay with Westpac. 

Damien MacRae, the chief executive of Westpac BaaS (who took up the new role in April of this year), elaborated: “A change of ownership naturally sees partnerships evolve and we have been working co-operatively with Afterpay on this transition to ensure a smooth customer pathway. 

“Westpac is extremely proud of being first to market in Australia with our digital banking as a service business, and the work we’ve done with the Money by Afterpay team.

“We have learnt a great deal through this foundational partnership, and we wish them well for the next iteration of their business.

“Westpac is well placed to continue to leverage the capability from our partnership with cloud-native platform 10x.”

[Related: Afterpay Money could branch into mortgages next year]