MasterCard has a plan to disrupt Afterpay and Zip Co

Afterpay Touch Group Ltd (ASX:APT) and Zip Co Ltd (ASX:Z1P) could be disrupted by MasterCard.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The share prices of Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have gone crazy this year, Afterpay shares have more than doubled and Zip Co shares have more than tripled.

But this hasn't gone unnoticed by some of the world's biggest payment businesses.

Visa and MasterCard have built enviable positions with global networks, high profit margins and seemingly endless growth possibilities from the growth of bank card use in 'emerging' countries and e-commerce in the western world.

But Afterpay and others present a threat to the US payment giants with the payments going through the Afterpay system, although most people still utilise a Visa or MasterCard card for Afterpay at this stage. You can imagine that Afterpay would like to cut Visa and MasterCard out of the loop.

MasterCard isn't waiting to see what Afterpay plans to do. A couple of weeks ago MasterCard announced it had acquired Vyze.

Vyze connects merchants with multiple lenders, giving the merchant the chance to offer a range of credit options online and in-store for the shopping with payment flexibility at the point of purchase. Sounds somewhat familiar, right?

Afterpay can still point to the fact that its service is free for customers if they pay on time, whereas this is still offering credit. But, 'offered by MasterCard' marketing may attract consumers and retailers alike, particularly as Vyze claims to add 40% to 95% of incremental sales and a 60% higher order value for the retailer.

Foolish takeaway

A business that has a durable economic moat is important for the long-term growth performance of the company. Time will tell how well Afterpay does with all of the added competition.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

piggy bank at end of winding road
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors enjoyed a lucrative Tuesday session today.

Read more »

A hipster-looking man with bushy beard and multiple arm tattoos sits on the floor against a sofa reading a tablet with his hand on his chin as though he is deep in thought.
Share Market News

ASX 200 dips on RBA interest rate decision

The ASX 200 gave up some of its intraday gains following the latest RBA interest rate announcement. But why?

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Capitol Health, Infratil, Newmont, and Race Oncology shares are charging higher

These shares are having a good session. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Beach Energy, Fortescue, Kina Securities, and Melbana Energy shares are dropping today

These shares are missing out on the good times today. But why?

Read more »

A young woman wearing overalls and a yellow t-shirt kicks one leg in the air showing excitement over the latest ASX 200 shares to hit 52-week highs
52-Week Highs

CBA, DroneShield, and these ASX stocks just hit 52-week highs

These shares are flying high on Tuesday. What's going on?

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

Macquarie shares have 10% upside: Morgan Stanley

Another bullish broker on Macquarie.

Read more »

A woman looks questioning as she puts a coin into a piggy bank.
Broker Notes

Is the ANZ share price 'the best value of the major banks'?

ANZ shares are in the green today.

Read more »

Two kids in superhero capes.
Small Cap Shares

2 ASX small-cap shares I'd buy for massive growth potential

I’m bullish about these two stocks.

Read more »