PayPal Brings its 'Buy Now, Pay Later' Offer to Crowded Australia

The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017. (Reuters)
The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017. (Reuters)
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PayPal Brings its 'Buy Now, Pay Later' Offer to Crowded Australia

The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017. (Reuters)
The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017. (Reuters)

PayPal Holdings Inc will launch its “buy now, pay later” (BNPL) option in Australia this June, the US payments giant said on Wednesday, muscling in further on Afterpay Ltd and others for share in the booming industry.

So far PayPal’s new BNPL option has been rolled out in the United States and Britain where by the end of the December quarter it said it had handled more than $750 million of transactions.

The US payments giant now plans to bring its interest-free “Pay in 4” service to its more than 9 million customers in Australia, where regulation of the fast-growing space is thin compared to other consumer finance categories, while adoption is higher than other markets.

The arrival of PayPal presents a serious new competitor for Afterpay and Zip Co Ltd, who lead the domestic market, as well as Sweden’s Klarna which is backed by a small shareholding from Australia’s largest bank.

Andrew Toon, the general manager of payments at PayPal Australia, told Reuters the company had been “inundated” with requests from Australian merchants and businesses after the offshore launch of its BNPL service last year.

PayPal planned to capitalize on its long-standing relationships with Australian merchants but not to the point of seeking exclusive arrangements that would muscle out other BNPL providers, Toon added.

The company’s initial announcement last year that it would join the BNPL sector raised concerns among investors and analysts that its deep network with retailers and lower merchant fees might eat into the incumbents’ growth.

“The big question is whether (PayPal) gain incremental sales as in a potentially different customer base, or do they simply take share away from incumbents,” said Steven Ng, the co-founder and senior portfolio manager at Ophir Asset Management, which owns Afterpay shares.

Shares of Afterpay, which have been battered in recent weeks by the global tech sell-off, were up more than 8%, while Zip fell 3.6% toward the end of the trading day.

“You shouldn’t underestimate the scale and technological firepower that Paypal have in competing against existing players,” Ng said, adding that competition will see further innovation and BNPL take greater market share in the overall payments industry.



Chip Design Software Firms Climb as US Lifts Curbs on China Exports

Semiconductor chips are seen on a printed circuit board in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration
Semiconductor chips are seen on a printed circuit board in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration
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Chip Design Software Firms Climb as US Lifts Curbs on China Exports

Semiconductor chips are seen on a printed circuit board in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration
Semiconductor chips are seen on a printed circuit board in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration

Shares of Synopsys and Cadence Design Systems jumped on Thursday after the US lifted export curbs on chip design software to China, easing uncertainty around access to the crucial market.

The restrictions, announced in late May, had essentially cut off the market that brings over 10% of revenue for the industry's major players, hitting forecasts and knocking down shares.

The export resumption means both the companies will only lose one month of revenue in the current quarter, Mizuho analysts said. The easing trade tensions may also clear the path for long-awaited Chinese approval of Synopsys's $35 billion buyout of engineering software firm Ansys, the analysts added, Reuters reported.

Synopsys, which had pulled its forecast in May due to the curbs, rose 5.5%. The company said on Wednesday it is still assessing the impact of export restrictions on China on its financials.

Cadence and Ansys gained 6.1% and 3.5%, respectively, while Germany's Siemens, the third major player in the electronic design automation tools sector, was up 1.5% in Frankfurt.

"This marks a distinct warming of relations and a small ceasefire in the chips war," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Still, she cautioned that the move did not signal a broader shift on high-end chip exports from companies such as Nvidia. "The US will remain concerned about the technological prowess China has developed, and its use of US intellectual property."

Successive US administrations have sought to restrict China's access to advanced American chip technology, citing concerns that it could be used to strengthen Beijing's military.

But the export curbs have also fueled a surge in domestic chip design activity in China, aided by generous state subsidies. They have also stoked fears of retaliation, with analysts warning that Beijing could delay or block approval of the Synopsys-Ansys deal in response.

The deal, which has received merger clearance in every jurisdiction other than China according to the companies, carries a deadline of July 15 for its closure with an option to extend until January next year.