BNPL outlook: what one top CEO thinks of Apple’s move into the space

Reports this week from Bloomberg that Apple would be launching its own buy now pay later (BNPL) product has caused quite a stir amongst ASX-listed stocks in the sector.

The theme of growing competition was further compounded with PayPal officially launching its own BNPL product in Australia this week, with Macquarie analysts saying they expect to see a period ‘of consolidation within the industry before seeing a better outlook for the industry overall.’

Afterpay, Zip, Sezzle share prices fall

The response from the market to these developments was pronounced: over the last five sessions Zip has seen its share price fall around 17%, Afterpay has dropped 14%, while Sezzle has fallen close to 6%.

Yet the looming spectre of competition is nothing new to the BNPL market – both between the pure-play BNPL companies themselves (Afterpay VS Zip VS Sezzle) and against the tech giants and financial behemoths keen to eat those companies’ lunches (Afterpay/ Zip/ Sezzle VS Apple/ Visa/ PayPal).

Whether the Apple threat potentially represents the ‘final straw’ for these smaller BNPL companies is a highly contentious topic. Take the Visa example.

When Visa first announced it was launching its own buy now pay later product in 2019, traders and investors panicked. Here’s a telling excerpt from a July 2019 article titled Visa crashes the Afterpay party: 3 potential benefits for SMEs:

‘Share prices of micro-loan providers like Afterpay and Zip Co plummeted, and regulatory authorities started licking their lips in anticipation of Visa’s imminent arrival into the micro-loan sphere.’

Since 1 July, 2019 the Afterpay share price has rallied 252% and the Zip share price has gained 121%. Past results of course do not guarantee future outcomes.

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CEO commentary on the Apple threat

Rather than see increased competition as a threat, others have positioned it as a point of validation for the still-young BNPL sector.

For example, this is what Sezzle’s Chief Executive Officer – Charlie Youakim – had to say about Apple’s reported entrance into the BNPL space:

‘We were not surprised about the Apple news, although as yet we do not have enough information to understand how Apple intends to play in the space.’

Adding to that and speaking of the BNPL sector more broadly, Mr Youakim went on to say:

‘Their [Apple’s] entry does reinforce what we already know—that BNPL is here to stay, and increasingly relevant. It is rapidly becoming a preferred payment option for next-gen consumers seeking a fresh approach to accessing and using credit, as well as, in the case of Sezzle users, building credit worthiness. There is lots of room in this space for new players to compete and even join forces to support BNPL's evolution into a mainstream and dominant payment solution--and a gateway to extended or traditional credit.’

Since listing on the ASX in 2019, the Sezzle share price has risen over 250%.