Afterpay and Zip, the two largest BNPL companies in Australia with global exposure are down on the ASX today. As of writing this, APT shares are down 9.5% and Z1P shares are down 10%, making them the worst performers on the ASX 200 today. The entire BNPL sector is in the red today as there is once again new suggestions of additional competition.
APT shares and Z1P shares have had a volatile ride in the past few months, and this has largely been due to the increasing competition in a sector that is already associated with extremely slim margins.
News emerging today suggests that the world’s largest company in the world – Apple Inc is looking to enter the BNPL sector. The reporting suggests that consumers will be able to avail buy now pay later benefits when making purchases with Apple Pay. The service is expected to be known as Apple Pay Later and it works in association with Goldman Sachs as the lender. Apple and Goldman have been working together since the tech giant unveiled their Apple Credit Card back in 2019.
Apple’s entry into the space is bound to take away some of the market share even from the likes of Afterpay and Zip as the process of BNPL will be simplified for every iPhone user. It also means big trouble for the lesser known BNPL providers such as Humm, Splitit, etc.
APT shares and Z1P were thus sold-off today in light of this report. Another large competitor already affecting the space is Paypal. The FinTech big dog’s entry into BNPL has been good so far and Paypal is known to be undercutting the competition in a bid to win the turf wars. A high degree of volatility is expected to sustain the BNPL sector. APT shares and Z1P shares will remain in the spotlight as the increased competition will lead to further squeezing of margins.
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