It's a sea of red for buy now, pay later (BNPL) ASX share prices on Wednesday.
The largest BNPL ASX companies including Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX SZL) have seen their share prices tumble 9.59%, 10.77% and 10.03% respectively.
Headlining the slump in BNPL ASX share prices is news that Apple Inc (NASDAQ: APPL) might be launching a new BNPL service to the market.
However, to add further insult to injury, PayPal Holdings Inc (NASDAQ: PYPL) has revealed that it will not charge late payment fees for its BNPL services.
Another stab at BNPL ASX share prices
PayPal successfully launched its BNPL feature in the United States late last year. It would then reveal plans to roll out in Australia by early June 2021.
The announcement first came about on 9 March when BNPL ASX share prices such as Afterpay's tumbled 5.29% on the day.
Fast forward to today, PayPal has upped the ante by saying it will not charge late payment fees.
The Australian Financial Review (AFR) quotes PayPal Australia's head of payments Andrew Toon:
"PayPal research of its online shoppers showed high awareness of buy now, pay later options, but more than 50 per cent said they had not used them… and many of them were put off by late fees and we are genuinely responding to that".
By comparison, Afterpay automatically charges an initial $10 late fee and a further $7 if the payment remains unpaid 7 days after the due date.
In FY20, Afterpay generated $68.8 million from late fees, or 13.7% of the company's total income.
PayPal will also undercut Afterpay's merchant fees, with the AFR reporting PayPal will levy a fee of 2.6% of the cost of goods plus 30 cents, compared to Afterpay's 3.9% plus 30 cents.
Mounting competition is nothing new to the BNPL sector.
Back in 2016, MasterCard revealed its own BNPL product, MasterCard Installments, which it spruiked as an "innovative way to pay that offers consumers flexible and convenient access to funds when needed".
In late 2020, JPMorgan made its entrance into the booming BNPL space, giving its credit card customers an option to pay through instalments with no interest.
However, today's news sees a US$2.4 trillion giant, that is Apple, potentially enter the space — as well as payments behemoth PayPal revealing an edge against ASX BNPL players.