The Zip Co Ltd (ASX: Z1P) share price is on watch today on news that there could be an upcoming BNPL service called Apple Pay Later.
Apple Pay Later
It is being reported by Bloomberg that the technology giant Apple Inc (NASDAQ: AAPL) is working on a new service that will mean that consumers can buy now and pay later with any Apple Pay in instalments.
That will put it in competition with the many US-based buy now, pay later providers such as Zip, Afterpay Ltd (ASX: APT), Sezzle Inc (ASX: SZL) and non-ASX ones like Affirm Holdings Inc (NASDAQ: AFRM) and Paypal Holdings Inc (NASDAQ: PYPL).
Bloomberg also reported that Apple Pay Later is going to use Goldman Sachs as its lender for the loans needed for the instalment offerings according to its sources. The media outlet pointed out that Goldman Sachs has been Apple’s partner for the Apple Card credit card since 2019, but the new offering is not tied to the Apple Card and does not require the use of one.
What does this mean for ASX BNPL and the Zip share price?
Apple Pay is a popular service, particularly with the younger generations. But buy now, pay later is also more popular with the younger generations. So there is certainly a risk that Apple Pay Later could take some market share in the space and/or deny Zip and Afterpay from winning as much market share as investors were expecting in the future.
Afterpay was a pioneer in the space, but BNPL is now seeing rising competition from titans in the financial and fintech spaces.
PayPal and Apple are two of the largest global players when it comes to payments. Locally, Commonwealth Bank of Australia (ASX: CBA) recently announced that it was going to launch a BNPL offering for consumers.
The problem is, these competitors could provide the service for a lower cost to merchants. That certainly means more competition and perhaps lower margins for Zip and Afterpay in the future.
I don’t think the current valuations, like Zip’s share price take that risk into account, so there are other ASX growth shares I’d rather look at.
