Ahmed Fahour with Harvey Norman's Gerry Harvey and Katie Page at the launch of LatitudePay.

Ahmed Fahour with Harvey Norman's Gerry Harvey and Katie Page at the launch of LatitudePay.Credit:Nine

The fees for retailers for purchases over this amount will be between 1 and 3 per cent,Mr Fahour said.

"The low merchant service fees - zero on the most popular pricing segment - means our retail partners get to keep more of the money they make with each transaction,"he said."Consumers will benefit when merchants are able to keep their costs low."

Latitude emphasises that it performs credit checks on its customers to ensure they can pay their bills. Commonwealth Bank last month said that its buy now pay later service - which it will offer through Swedish partner Klarna - will also maintain responsible lending practices.

Mr Fahour said this was important because buy now pay later providers were essentially providing a loan.

Consumers will benefit when merchants are able to keep their costs low.

"This is credit. Some people call it a budgeting tool,that’s a fancy marketing word,they are borrowing money,"he said.

According to Mr Fahour,while Latitude (formerly GE Money) and Harvey Norman had been offering interest-free instalment payments for decades,the big change was that it now extended to lower value transactions.

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"It made sense that Harvey Norman chose LatitudePay as our buy now pay later product. The business has worked with Latitude for decades,"said Harvey Norman founder Gerry Harvey.

Signing up merchants for a buy now pay later service is considered one of the most crucial steps for gaining market share and there are signs that competition for merchants is intensifying.

Ahmed Fahour took up the top job at Latitude Financial last year.

Ahmed Fahour took up the top job at Latitude Financial last year.Credit:Paul Jeffers

Zip Co shares dived last month,despite a strong full-year result,when the company chief executive Larry Diamond said new entrants were using aggressive financial measures to take market share,compressing profit margins.

Latitude is expected to announce other new retailers using its service in the coming weeks. In a sign of how Afterpay has changed the payments market,Latitude aborted its plans to float on the ASX last year with a valuation of $5 billion.

At the time,Afterpay was worth $4.4 billion and is now testing the $8 billion mark.

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Latitude bought its way into the buy now pay later market with the acquisition of Genoapay in December last year for an undisclosed sum.

It charges a $10 late fee. Its website claims that retailers on average receive 24 per cent more revenue when customers use Genoapay.

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