BNPL boom puts these two companies the most directly at risk

on Oct 14, 2021
  • Lisa Ellis explains why BNPL boom puts two companies at risk.
  • She doesn't see BNPL as a threat to traditional card companies.
  • Ellis rates Square Inc at "buy" with a price target of $340 a share.

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Buy now, pay later (BNPL) has certainly been the talk of the market this year, with the fintech giant like Square Inc snapping up Australia’s Afterpay – one of the top three BNPL players globally.

Retailer specific private label card companies at risk

On the flip side, Lisa Ellis of MoffettNathanson warned the BNPL boom puts retailer-specific private label card companies at risk. On CNBC’s “Power Lunch”, she said:

BNPL is directly substituting the retailer-specific private label card. Those players today have about $200 billion in volume in the U.S. We’re expecting BNPL to grow to about $150 billion over the next few years, and most of that substitution is likely to come out of that category.

Two names in particular that pop out to her as the most at risk due to the exponential growth in BNPL services are Synchrony Financial and Alliance Data Systems. On the other hand, she rates Square Inc (NYSE: SQ) at “buy” with a price target of $340 that represents an about 40% upside from here.

BNPL is not a threat to traditional card companies

Ellis, however, does not see BNPL as a threat to traditional card companies as they are still used in “many aspects” of the business.

When you go to pay the instalments, 80% to 90% of the times you use a debit card. So, the card companies are getting more transactions that are accretive to their revenue. In addition, card companies are also used on the front end to pay the merchant.

Mastercard even launched a new product, Mastercard Installments, last month to penetrate the BNPL space.


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