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Afterpay (ASX:APT) Is About To Be Challenged By Latitude Financial’s BNPL

Afterpay Touch Group Ltd (ASX:APT) is soon going to have another large buy now, pay later (BNPL) competitor. 

Afterpay Touch Group Ltd (ASX: APT) is soon going to have another large buy now, pay later (BNPL) competitor.

Afterpay Touch is the owner of the popular “buy now, pay later” app. As of mid 2019, Afterpay had over 4.3 million registered users worldwide, making it one of Australia’s true technology success stories.

Afterpay’s Big New Competition

According to reporting by the Australian Financial Review, the country’s largest non-bank lender called Latitude Financial will soon launch a buy now pay later offering.

Latitude already has a buy now, pay later product called Genoapay in New Zealand, which will be brought to Australia.

This plan is likely to help Latitude Financial launch an initial public offering, which was previously going to be priced at $5 billion.

However, Genoapay is different in that it will actually be a credit product unlike Afterpay which has gone to lengths to prove that it is not a credit product.

But it does raise questions about how Latitude Financial will approach the recommendations made during the Royal Commission about credit products.

Should Afterpay Shareholders Worry?

I don’t think the introduction of one new competitor is necessarily a major issue. However, I think the build-up of competition certainly limits Afterpay’s growth trajectory.

Zip Co Ltd (ASX: Z1P) is doing well. FlexiGroup Limited (ASX: FXL) is trying to expand in the space with its Humm product, Visa, MasterCard and PayPal all have signalled their intention to grow in the buy now, pay later space.

Afterpay certainly has a big advantage compared to others in Australia. It’s well known by most consumers and it doesn’t cost the consumer anything. However, I’m concerned that retailers may not be so willing to keep paying the high merchant fee on each transaction.

That’s why, if you’re looking for growth, I would rather buy the growth shares in the free report below.

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