PayPal is launching a credit card. Could that mean bad news for the Afterpay Ltd (ASX: APT) share price and others?
What is the PayPal credit card?
As reported by the Australian Financial Review, PayPal is launching its credit card offering in Australia.
It’s going to be a white label offering from Citi and it will also come with rewards points.
One of the selling points about it, according to Andrew Toon, general manager of payments for PayPal Australia (as reported by the AFR), is that many credit card users have been left with frequent-flyer points they cannot spend because of COVID-19 border restrictions, but the PayPal card will hold points in the digital wallet and allow them to be redeemed via discounts at any of the 300,000 merchants integrated in Australia. The move could put pressure on banks, whose credit cards offer frequent flyer points or discounts out of a catalogue of goods.
Mr Toon said: “There is no silver bullet when it comes to payments. We are focused on delivering a one-stop payments shop.”
PayPal believes that many of its more than 9 million active Australian customers still want a credit card, especially if it has no annual fee and accrues points that can be spent on a wider range of options.
What could this mean for ASX shares?
There are plenty of ASX shares that are competing in this space in Australia. There’s obviously the buy now, pay later operators like Afterpay, Zip Co Ltd (ASX: Z1P), Humm Group Ltd (ASX: HUM) and Laybuy Holdings Ltd (ASX: LBY).
PayPal is more likely to be targeting a similar audience as Afterpay, Zip and so on in the BNPL space, so this could be more of an issue for them. If it hurts the BNPL growth, then it could hurt the Afterpay share price.
However, the big banks of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) earn a sizeable chunk of money from credit cards too, so this could be disruptive for them.
PayPal is a powerful player in the financial space and it’s now offering a lot of the things that customers might want. ASX growth shares that are competing in this space have their work cut out for them.
