The ASX-listed shares of buy now pay later pioneer, Afterpay, came under heavy selling pressure on Wednesday after UBS analysts issued a bearish commentary on the prospects of the company's existing business model.After initiating coverage on the controversial company, UBS analysts Tom Beadle and Jonathan Mott warned clients that Afterpay might be challenged to disrupt the point-of-sale finance market in the US where it faces stiffer competition from other buy now pay later providers.Afterpay recently embarked on a global growth strategy that it hopes will boost revenue and establish it as a leading brand in the US and British markets.However, UBS believes Afterpay might be entering a more crowded market in the US where other providers such as Klarna and Sezzle have footholds.Visa, the world's largest credit card scheme, has also signalled it will launch a buy now pay later offering in the US next year.The UBS analysts are also concerned that Australian regulators could force the company to remove a key feature of its business model that has underpinned its success.Under the current operating model, retailers are prevented from recouping from customers the merchant service fees that Afterpay charges on transactions.While the restriction has made Afterpay's buy now pay later service more attractive to some consumers than credit and charge card providers, UBS suspects that the surcharging ban might be curtailed."Afterpay's model relies on prohibiting merchants from passing on Afterpay's costs to customers," the UBS analysts told clients in a report."For credit/debit cards in Australia, merchants cannot legally be prevented from passing on costs. "If customers are presented with the true cost of buy now pay later, we see risks to growth." The broker's commentary, which included a 'sell' recommendation and a bearish share price target of A$17.25, sent Afterpay's share price into a tailspin.The company's scrip defied a market-wide rally on the ASX to close down $2.64 or 7 per cent to $33.92.Trading in the company's scrip was heavy, with around 4.8 million shares changing hands - more than double the average daily turnover for the stock.Brokers are divided on the immediate and long term outlooks for the company.GoldmanSachs recently slapped a buy recommendation on the stock after setting a new 12 month price target of $42.90.Regulatory risk weighing on Afterpay was heightened earlier this year when Australia's anti-money laundering enforcement agency, AUSTRAC, highlighted weaknesses in the company's compliance with AML/CTF laws.An external audit of the company's AML compliance record is continuing.