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Why the Splitit share price has shot up 135% in 2 days

hand holding mobile phone about to make credit card payment
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The share price of buy now, pay later (BNPL) provider Splitit Ltd (ASX: SPT) is up by a massive 27% so far in trading today. This follows on from a whopping 108.3% share price rise yesterday.

The BNPL market has really being heating up over the past year, with rivals Afterpay Ltd (ASX: APT) and Openpay Group Ltd (ASX: OPY) all vying for a piece of this rapidly expanding market.

New deal with Mastercard

So, what has been behind this rapid increase in the Splitit share price over the past two days? It all appears linked to the company’s deal with Mastercard announced yesterday.

The new agreement will enable Splitit to work in partnership with Mastercard by integrating its instalment solution with Mastercard’s own technology platform. The deal is likely to further assist Splitit in its quest to globally rollout its offering.

The new solution with Mastercard will provide connected merchants the ability to deliver customers a seamless and secure customer checkout experience, whether in store or via online channels.

So how does the Splitit instalment solution work?

Splitit is cleverly carving out a very interesting niche in the BNPL market. Splitit does not extend credit to customers like its main and much larger rival Afterpay. Instead, Splitit’s payment solution enables customers to pay with their existing debit or credit card. It does this by splitting the cost into monthly payments. Also, since the purchase is made with an existing card, approval of the transaction is immediate.

Previous deal with Visa

The deal announced with Mastercard yesterday, follows on from another agreement announced with Mastercard‘s rival Visa, back in March.

Through this deal, Splitit is able to leverage the Visa Developer Platform to further expand into the instalment payments market. Splitit now offers Visa Instalment Solutions to its merchant network.

A rocky ride for the Splitit share price

The Splitit share price has been quite volatile over the past 12 months. Although it has shot up significantly over the last two trading days, prior to this it was failing to even reach its early 2019 levels. The Splitit share price grew very strongly in early 2019, shooting over $1.50 at that time, but since lost ground up until two days ago. It fell as low as 24 cents per share in March this year.

At the time of writing, the Splitit share price is trading at $1.75. Time will tell whether or not it can maintain share price momentum this time around.

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Motley Fool contributor Phil Harpur owns shares of AFTERPAY T FPO. 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.

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