The Afterpay Touch Group Ltd (ASX: APT) share price will be one to watch this morning after reports of yet another new entrant to the buy now pay later (BNPL) market in Australia.
According to the AFR, Latitude Financial is planning to bring its BNPL platform to Australia in the near future.
What is Latitude Financial?
Latitude Financial, formerly known as GE Money, is Australia's largest non-bank lender and has been widely tipped to list on the ASX later this year after pulling its ~$5 billion IPO last year.
It counts the likes of KKR, Varde Partners, and Deutsche Bank as shareholders, with all three reportedly keen to test the appetite of investors with an IPO.
At present its New Zealand-based business offers a BNPL product named Genoapay.
Genoapay allows Kiwi consumers the opportunity to buy products and services needed today, but pay for them over 10 weekly instalments. The platform is available in thousands of locations throughout New Zealand including retailers such as Harvey Norman Holdings Limited (ASX: HVN), Playtech, and Furniture Zone.
As with fellow BNPL providers Afterpay and Zip Co Ltd (ASX: Z1P), the signup process takes just a couple of minutes and includes Genoapay performing a real time credit check to let the user know how much they can spend.
Crowded market.
If Genoapay does in fact launch in Australia, it will certainly make for a crowded market.
Consumers can already choose from Afterpay, Zip Co, Splitit Ltd (ASX: SPT), and the FlexiGroup Limited (ASX: FXL) BNPL service, humm. Then there's the probable arrival of US-based Sezzle in the near future.
It is expected to list on the Australian share market next week with a valuation of ~$220 million. Sezzle raised almost $44 million to fund its expansion, which is likely to include a foray into the Australian market.
And then there's payments giant Visa, which recently revealed that it has its eyes on the fast-growing market.
With so many companies trying to win the attention of both retailers and consumers, I feel there is a danger that a price war could break out and impact the profitability of the industry.
I think it might be a little soon to panic, though. But I would suggest investors keep a close eye on how the market develops over the coming 12 months.
