Australia’s “buy now, pay later” (BNPL) shares fell on Tuesday after Apple (AAPL) launched its own “pay later” service. This happened at a time when rising interest rates, high prices, and geopolitical tensions have made the global fintech industry weak.
This year, the share prices of Australia-listed BNPL companies like Zip Co and Sezzle Inc, as well as companies with exposure to the sector like Humm Group and Openpay Group, have dropped by more than 10%, just like their counterparts in other parts of the world.
Their shares fell between 3.1% and 14.4% on Tuesday because Apple’s move into the BNPL market adds to the pain caused by a bad economy, which discourages the average consumer from spending money on things they don’t need.
“BNPL players took a big hit on ASX today because Apple’s latest BNPL product directly competes with theirs,” said Kunal Sawhney, CEO of Kalkine Group. “This adds to the gloomy outlook that BNPL firms will have a hard time surviving the cost-of-living crisis.”
Klarna, a Swedish fintech company that is seen as a leader in its field, laid off 10% of its staff last month, and a recent round of capital raising showed that the company’s value has dropped by a huge amount.
In the six months before December, bad debts at Afterpay, which was bought by Jack Dorsey’s Block for $32 billion, were more than double what they were the year before.
Australia’s central bank surprised the markets on Tuesday with a 50-basis-point rate hike, which was twice what was expected and the most in 22 years. This made things worse for the BNPL sector. It also said that there would be more tightening to fight rising inflation.
