Absolutely this - people need to stop their panicking for 5 seconds and actually do some thinking. There are multiple aspects people need to consider:
- What do you think PayPal increasing their merchant fees in the US and having to scrap their late fees in Australia tells you? It tells you that, despite what various media outlets say, it is not that easy to just unseat incumbent players that have already established themselves with millions of users. There was some bs article put out about how BNPL customers aren't loyal and would switch to new entrants easily - probably best not to forward that onto the entire Klarna Australia exec team that just got fired for gaining little traction down here.
- What do you think Apple is going to do? They may well just do a similar approach to PayPal whereby existing Apple Pay merchants can now just offer a BNPL option to customers - big f*cking deal. They'll now add their BNPL option to the 2-3 options already offered at many retailers. But do people seriously think that APT/Quad/SZL users will all suddenly stop using their BNPL and switch? Or that every single new customer in the entire US market will never touch a different provider? I mean for f*ck's sake get real.
- Think about consumer behaviour for a moment - very rarely does the introduction of a new product that is literally just a copy of an existing highly successful product gain meaningful traction. Don't get me wrong, they'll get some users, but 'Apple's amazing BNPL killer' cannot just be another BNPL option.
As mentioned previously, people should also assume Google Pay will now likely introduce something at some point, but this is quite stunning validation of this sector - imagine if APT/ZIP/Quad can take their place alongside PayPal, Apple Pay and Google Pay.
To perhaps put a lot of that more succinctly, PayPal is a $US350bln+ payments giant - if they are already beating the retreat in terms of having to change their product offering to compete, people need not be so worried. If the introduction of payments giants into this space was going to be a major issue, we would already have seen growth rates dented, merchant sign-ups reducing, margins materially compressing, etc. None of this has occurred. The stock will take a short-term thump from this, then likely have moved on not long after.
Z1P Price at posting:
$8.26 Sentiment: Buy Disclosure: Held
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