Afterpay (ASX:APT) and Zip (ASX:Z1P) share price falls as Mastercard opens up the BNPL sector

Mastercard wants to muscle into this growing sector.

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The Afterpay Ltd (ASX: APT) share price and the Zip Co Ltd (ASX: Z1P) share prices are trending downwards today.

The negative price movement follows a recent Sydney Morning Herald article. The article confirms Mastercard Inc (NYSE: MA) will begin rolling out technology for any bank or financial institution to offer their own buy now, pay later (BNPL) service.

At the time of writing, shares in Afterpay are trading for $123.11 – down 3.24%. Zip shares are 1.41% lower at $7. The S&P/ASX 200 Index (ASX: XJO) is down 1.45%.

Let’s take a closer look.

The BNPL sector gets a little more crowded

The news might be rattling the Zip share price. Mastercard says “strong demand for BNPL services” has led it to develop the technology to enable any business to provide the BNPL model of payment.

According to the SMH, Mastercard will launch the program next year in Australia and already has 2 Aussie business partners. Those partners are Qantas Airways Limited (ASX: QAN) and Latitude Group Holdings Ltd (ASX: LFS).

Mastercard already offers its services to BNPL providers Afterpay and Commonwealth Bank of Australia (ASX: CBA). It is now expanding its scope to sell the infrastructure and services necessary to allow any business that wishes to offer payment for goods and services in 4 increments.

“We will expect to see, and frankly have already seen, interest from banks of all sizes, lenders, merchants looking for alternatives and new ways to offer lending products to consumers,” Mastercard Australasian president Richard Wormald told the outlet.

Latitude Financial CEO Ahmed Fahour also told the paper:

Through our long-standing partnership, Latitude is looking forward to working with Mastercard to bring new BNPL payment solutions to life in Australia, benefiting merchants and providing customers with a superior shopping experience.

This isn’t the first time increasing competition in the BNPL sector has affected the Zip share price. In September 2020, PayPal Holdings Inc (NASDAQ: PYPL) announced it was launching its own BNPL service. Zip shares would fall a whopping 12.8% by the end of the day.

Afterpay and Zip share price snapshot

Over the past 12 months, the Zip share price has increased 8.12% while the Afterpay share price has increased 50.46%. Of course, Afterpay shares got a real shot in the arm when Square Inc (NYSE: SQ) announced it would acquire the company. That was in a deal worth $39 billion at the time.

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Motley Fool contributor Marc Sidarous owns shares of Qantas Airways Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Mastercard, PayPal Holdings, Square, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Mastercard and PayPal Holdings. 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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