Why the Sezzle (ASX:SZL) share price is sinking 10% on Wednesday

Sezzle shares are fizzling on Wednesday….

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The Sezzle Inc (ASX: SZL) share price has been among the worst performers on the Australian share market on Wednesday.

In morning trade, the buy now pay later (BNPL) provider’s shares are down 10% to $8.00.

Why is the Sezzle share price sinking?

The catalyst for the weakness in the Sezzle share price today has been reports that the BNPL market is about to get a major new competitor.

As I revealed here earlier, Bloomberg understands that tech giant Apple is planning to launch a new offering – Apple Pay Later.

The prospect of Apple entering the market isn’t just weighing heavily on the Sezzle share price, it has sent Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) shares deep into the red as well. Furthermore, overnight on Wall Street, fellow BNPL provider Affirm saw its shares crash 10% lower on the news.

What are Apple’s plans?

Apple declined to comment on the speculation, but Bloomberg understands that the new service will let consumers pay for any Apple Pay purchase in instalments via two options.

This will be through an interest-free Apple Pay in 4 option and a longer-term option with interest called Apple Pay Monthly Instalments. As with Afterpay, the Apple Pay in 4 offering gives consumers the opportunity to pay for items across four interest-free payments made every two weeks. Investment bank Goldman Sachs is understood to be acting as the lender for the instalment loans.

The report suggests that Apple is interested in entering the BNPL market to help drive Apple Pay adoption and convince more users to pay for items using their iPhone instead of traditional debit or credit cards.

With Apple receiving a percentage of transactions made with Apple Pay, the tech giant reportedly hopes that this will boost its US$50 billion per year services business.

Despite today’s decline, the Sezzle share price is still beating the market in 2021. Since the start of the year, the Sezzle share price is up a sizeable 27.5%.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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