Could Zip shares be a winner of more regulation in the BNPL sector?

Zip Co Ltd (ASX: ZIP) shares are plummeting amid news the buy now, pay later (BNPL) industry will soon face greater regulation in Australia.

But there’s little need to worry about the impact on the company, co-founder and chief operating officer (COO) Peter Gray says.

Zip was “well-placed to continue with business as usual” in the face of increased regulation, Gray told ABC Radio. In fact, the BNPL share isn’t expecting to lose a single customer as a result of the shift.

The Zip share price tumbled to a low of 53 cents this morning – a 7.8% drop.

It’s since recovered slightly to trade just 5.2% lower at 54.5 cents at the time of writing.

For comparison, the All Ordinaries Index (ASX: XAO) is down 0.31% right now.

Let’s take a closer look at what might be weighing on the ASX BNPL share today.

Could ASX BNPL share Zip be a regulatory winner?

In news reportedly announced by Minister for Financial Services Stephen Jones today, the BNPL industry will soon fall under the Credit Act.

That means providers will need to hold a credit licence and undergo checks to ensure consumers can afford to pay off BNPL debt before providing the products.

And while the changes sound like they could be dire for ASX BNPL shares, Zip might be in a position to benefit.

Gray applauded the Government’s move, saying the company had been advocating for such changes for years. He told ABC Radio:

It’s likely to be a competitive advantage for our business in Australia, given how well placed we are in our business practices that we’ve adopted since inception.

As I touched on, it’s business as usual for us, whereas many of the competitive peer set really will have to make some significant changes to the way they operate their business.

The company already holds a credit license and completes affordability checks on all its customers. It also has “robust” hardship, dispute, and complaint resolution processes in action, Gray noted.

That’s good news for shareholders, the insider said.

Investors “should be encouraged” that the changes could be a “positive differentiator” for the company, even carrying the potential to increase its market share.

Of course, it would likely take more than a competitive shift to see Zip shares regain all they’ve lost in recent years. The stock is currently 96% lower than it was at its 2021 peak.