Buy Now, Pay Later

Who doesn’t want to pay off a pizza over six weeks?

I was doing some research on something totally unrelated to buy now, pay later (BNPL) — but came across this interesting statistic:

“Higher-margin verticals, such as fashion and accessories, are seeing increased demand for financing solutions and affiliate marketing products. As an example, within the fashion and accessories verticals in the United States, the number of merchants signed up for buy-now, pay-later solutions has nearly tripled.” ( McKinsey)

PayPal is starting its own BNPL product. Amazon and Apple have partered up with Affirm, and Target recently joined forces with Sezzle.

The downsides? Buyers will spend more than they can afford. LendingTree reports nearly half of consumers would have foregone a purchase if they didn’t have the option to finance. And if you’re trying to build credit, most BNPL lenders don’t report to the credit reporting companies. Also, if you miss a payment, you could be looking at late fees, deferred interest and other penalties. LendingTree data shows 7 in 10 BNPL users have been charged interest or fees for missed payments. ( CNBC)

And it’s not just Fashology, because yes, you can buy a pizza with BNPL:

Howard and Julie have a lengthy discussion on BNPL.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. I have a disclosure policy.

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