Afterpay and Zip have struck deals with Westpac and Visa to bundle their services, as payment providers expand and evolve with technology.
Afterpay on Tuesday said it will offer its 3.3 million users in Australia the ability to link Westpac transaction and savings accounts.
This will let users of the app pay bills, withdraw funds and use budgeting tools.
The buy now pay later provider expects to gain more insights into users' finances and use these to develop more services.
The linking of the services has been made possible by Westpac's new digital banking platform.
The nation's big banks are scrambling to find new ways to appeal to young, tech-savvy customers who favour payment apps over credit cards.
The Commonwealth Bank has a stake in Swedish buy-now-pay-later provider Klarna, and offers the app to customers.
Westpac chief executive Peter King said innovation was changing banking and Westpac's new technology platform was part of a strategy to better respond.
Royal Bank of Canada analyst Tim Piper said Westpac could offer new services to Afterpay users, and better connect with younger people.
Zip on Tuesday said its users will be able to pay at any store that accepts Visa cards.
Zip users will be able to scan their phone and digital wallet on any payment terminal that reads Visa cards.
The buy-now-pay-later provider said it reviewed how customers used its technology at shops, which has been based on QR codes, and found it clunky. Users can still pay this way if they prefer.
Only 13 per cent of shops in Australia accept buy-now-pay-later transactions, according to Zip. The finding has prompted the company to try and capture more sales at checkouts.
Zip chief executive Larry Diamond said the deal allowed Zip to compete with the credit card at every checkout in Australia.
Businesses using Visa will also benefit, according to Mr Diamond, as they gain access to buy now pay later users.
Shares in Zip were higher by 0.7 per cent to $7.22 at 1409 AEDT.
Shares in Afterpay rose to a record high of $105.80 earlier, and were 5.95 per cent higher to $103.34.
Westpac shares were down 0.93 per cent to $18.60.
