PayPal is expanding its Pay After Delivery service, should Afterpay Touch Group Ltd (ASX: APT) worry?
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of early 2019, Afterpay had over 3.5 million registered users worldwide, making it one of Australia’s true technology success stories.
What Is Pay After Delivery?
Pay After Delivery is an option for consumers to pay for products through PayPal 21 days, in other words three weeks, after the purchase.
PayPal’s promotional material said that this service has no interest, no fees and no dramas. PayPal wants to muscle in on the buy now, pay later sector here in Australia.
Importantly, PayPal said that it’s protected in that if something goes wrong, you can still be refunded for the full purchase price including shipping with ‘Buyer Protection’ – which means you have 180 days to file a dispute if the order is significantly different to the seller’s description or doesn’t arrive. This is for things that cost up to $20,000 per item.
The seller is paid immediately with Pay After Delivery, but the buyer doesn’t have to pay for 21 days. However, not every customer will be eligible to use this service.
PayPal said that Pay After Delivery is available at thousands of Australian stores that accept PayPal.
Should Afterpay Shareholders Worry?
Clearly I think Afterpay shareholders should be worried about competition over the longer term. Afterpay has risen to prominence because of its payment capabilities online and in store but it’s quite possible for other businesses to offer the exact same thing such as Zip Co Ltd (ASX: Z1P) and Splitit Ltd (ASX: SPT).
PayPal is an online retail payment juggernaut that consumers may trust more than Afterpay to pay through.
Afterpay has not been around that long and I’m not sure how well it can stand competition. With the Afterpay share price valued extremely highly, I’m not sure it’s a good value buy today. I’d rather think about the growth shares in the free report below.
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