Overnight, Mastercard launched a BNPL product and many stocks in the sector dropped – except for one company it has partnered with to roll out the product in Australia.

Mastercard (NYSE:MA) launched its “Mastercard Installments” product overnight to be rolled out in the USA, Australia in the UK.

Just like its competitors, it will offer a pay-in-four model with no interest.

The product will be available next year and will be used at over 70 million merchants through their lender’s mobile banking app.

For the Australian BNPL launch, Mastercard has teamed up with Qantas and Latitude Financial (ASX:LFS), while in the US it partnered with a handful of financial institutions led by Barclays.

“People want more from their money”

Mastercard said BNPL adoption was accelerating globally thanks to changing consumer spending habits formed amidst COVID-19.

“At the heart of it, payments come down to choice – and people want more from their money with greater flexibility and control in how they pay and where they shop,” said Craig Vosburg, Mastercard’s Chief Product Officer.

“Mastercard Installments has been built on our guiding principles to protect consumers and enable choice without sacrificing trust and security.

“It is a digital-focused way to pay today and tomorrow, delivered through consumer’s most trusted relationships with their banks and other lenders, at merchants of their choice.”

Mastercard’s partners likewise lauded the deal including Ahmed Fahour, Latitude’s CEO.

“Through our long-standing partnership, Latitude is looking forward to working with Mastercard to bring new BNPL payment solutions to life in Australia, benefiting merchants and providing customers with a superior shopping experience,” he said.

Another hit to BNPL shares

Mastercard’s moves marks the entrance of another large competitor into the now-crowded sector, and most ASX BNPL shares fell sharply at the opening bell this morning.

Since Afterpay’s (ASX:APT) tie up with Square was announced, many BNPL stocks have lost ground as new players entered the sector.

The most recent was Suncorp (ASX:SUN), which unveiled its product earlier this month.

Code Company Price %1 Day %Mth %SixMth MktCap
APT Afterpay Limited 123.33 -3.0653 -5 16 $36.9B
CI1 Credit Intelligence 0.015 -3.2258 11 -50 $24.8M
DOU Douugh Limited 0.072 -4 -23 -58 $33.9M
FFG Fatfish Group 0.055 -1.7857 -15 -48 $58.0M
HUM Humm Group Limited 0.84 0 -12 -14 $416.0M
IOU Ioupay Limited 0.27 -1.8182 0 -39 $151.6M
LBY Laybuy Group Holding 0.52 0 -5 -48 $132.3M
LFS Latitude Group 2.18 0.9259 -7 -17 $2.1B
NOV Novatti Group Ltd 0.455 -2.1505 -9 -9 $150.5M
OPY Openpay Group 1.34 0 -1 -44 $141.9M
PYR Payright Limited 0.355 0 -9 -50 $24.4M
SPT Splitit 0.44 -1.1236 -4 -46 $207.5M
SZL Sezzle Inc. 5.84 -1.5177 -9 -21 $1.2B
Z1P Zip Co Ltd. 6.93 -2.3944 0 -11 $4.0B
ZBT Zebit Inc. 0.73 0 -14 -51 $69.0B
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Also impacting the sector today was the latest rise in bond yields, and speculation the Federal Reserve may have to tighten monetary policy more quickly than expected.

Such moves in the bond market tend to impact hyper-growth assets.

Such assets usually fall when bond yields are rising because they have higher valuations and are most reliant on future growth, which can be curtailed by higher interest rates.

US indices fell over 1.5% overnight, and the ASX fell by over 1% today with tech being a major sector sold off in both instances.

But one exemption to today’s drop was Mastercard’s new BNPL partner, Latitude Financial, which rose by nearly 1% this morning.

Latitude (ASX:LFS) share price chart