Is Apple Pay Later a rival to Mastercard’s buy now pay later offering?
In the Interview, the specialist said increasing interchange fee regulation and the emergence of local payment networks is putting pressure on card networks like Mastercard and Visa. They told us this is pushing the companies to seek additional revenue sources through value-added services on individual transactions in an effort to increase margins.
We heard that Visa and Mastercard’s inability to discreetly price individual transactions is the most significant barrier to capitalising on value-added service flows such as loyalty programmes, discounts, coupons and instalments.
The specialist also discussed recent proposals by US Senator Dick Durban to increase credit card competition. Also known as the Durbin Amendment, the proposals could be difficult to implement, according to the specialist, due to the “fragmented” domestic merchant acquiring landscape in the US. However, they warned that the fact such plans were being discussed “creates a long-term threat to card networks” in the country.
Meanwhile, the specialist said BNPL merchant discount rates will likely continue to compress. We heard that market participants are expected to hedge against this compression by charging monthly account fees to consumers.
The specialist anticipates increased consolidation in buy now pay lat because banks want “to get in the game”. They also believe the biggest market share winner would be the first that can offer an instalment debit product. While they said Mastercard’s instalments programme is “interesting”, they believe Apple Pay Later is “the best credit instalments product” in the industry.
Apple Pay Later could be a “major threat” to fintechs like Afterpay and Klarna, according to the specialist. The specialist added that Apple Pay Later could potentially end such companies’ ambitions to become instalment providers and return them to affiliate marketing programmes.
Click here to access all the human insights in Third Bridge Forum’s “Mastercard – buy now, pay later positioning and cross-border expansion” Interview.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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