PayPal officially joins the race, page-462

In AFR Today. Not sure how commited Paypal will be in pushing their BNPL. The harder they will go, the more they cut into their existing BIG Business.

RBC holds valuations on BNPL stocks despite PayPal entry

William McInnes

RBC Capital Markets has held its valuations and estimates on buy now, pay later providers Afterpay, Sezzle and Zip Co despite PayPal announcing its entry into the segment.

The broker said while PayPal came to the table already boasting a global network of active customers and merchants, its entry does not guarantee significant disruption or domination.

PayPal's entry into BNPL isn't an immediate concern to other providers. Bloomberg

"At a high level, PayPal is coming into the space from a payment processing perspective, while BNPL providers have positioned themselves as valuable marketing lead channels, data insight providers and conversion drivers for their merchant partners," said analyst Tim Piper.

"Has PayPal recognised the instalment sector as a growing channel over the long term and hence are simply providing their network with optionality? Or does PayPal view Pay in 4 as an opportunity to invest significantly into a service which they anticipate will drive increased customer and merchant penetration, share of wallet and further product initiatives over the long term? The answer will be significant for the competitive landscape."

The broker said established buy now, pay later providers had an advantage over incumbents as a marketing lead channel, with customers developing strong brand affinity with their providers.

It also noted current BNPLs provided deep customer data insights and had developed dynamic credit processes which did not require credit checks.