MAstercard and Amex don't take on credit risk either. Outside...

MAstercard and Amex don't take on credit risk either. Outside banks PayPal is one of the few players that does. Bank's aren't in a position to offer a BNPL product due to regulatory capital constraints (hence NAB's crappy offer of a BNPL credit card as opposed to a product like ZipPay and Afterpay).

So it's really just PayPal that's competition.

I should note that Klarna is a bank that is able to offer a BNPL product like Afterpay despite it's regulatory obligations but it was able to raise capital due to it being a fintech with early market penetration (Klarna is well capitalised with 22% CET1 ratio). In my opinion its too late for banks to follow suit as they'd have to raise a massive amount of capital to go on a risky journey to replicate what Klarna did but without the first mover advantage. Try explaining to shareholders that's what you're doing. Unlikely in an environment where banks are already putting aside massive provisions for bad debt (sometimes financed through capital raisings) due to COVID-19. It's more likely that banks will make strategic investments such as Westpac and CBA.

PayPal is THE competition and if Z1P and Afterpay can thrive despite PayPal (as I'm expecting) then the sky is the limit. AIMO.