Repayment problems mount as BNPL surges

The clamour for regulation even sits with those using BNPL many of whom don't realise it's not yet regulated!

See post here based on some research done last weekend....https://www.linkedin.com/posts/neilccallaghan_buy-now-pay-later-how-does-it-work-activity-6876521365298589696-FDeP

We await class action suits similar to PPP and Payday loans due to lack of clarity and transparency in the sales process

If you had to design a financial disaster and consequent scandal, you would probably come up with BNPL.

Wonga 2.0

Oh c'mon, it's not like every consumer has worked out their repayment plan when they say "put it on my card" at the checkout - and that's on credit card with 24-36% APR. Ditto Payday Loans. In contrast, most BNPL is Zero Interest - what's not to like about it?

This BNPL Dunking Campaign reeks of the involvement of banks who haven't understood BNPL and are losing out big time to Affirms & Klarnas who, unlike themselves (banks), are VC funded and can accept losses / miniscule profits for a long time in the pursuit of growth in loan volumes.

If it looks to good to be true, it probably is.... at the end of the day BNPL is a loan... the valuations of these loan companies looks a bit inflated to me, and their credit scoring and reporting looks dodgy to say the least.  Not sure how they work in countries where Consumer Debt Burden calculations are a thing.... Good luck to them, but lets not confuse a consumer loan with low barriers to entry, with a ground breaking fintech initiative!

Eppo Heemstra of Connective Payments has just published an insightful article about the hesitant start of regulatory action on BNPL: https://www.connectivepayments.com/buy-now-pay-later-calls-for-regulation/

The same merchants who rant against 2-3% MDR for Credit Card are happily forking out 4-6% MDR for BNPL, which is enough for BNPLs to offer Free Credit. It doesn't look too good to be true.   

At the peak of Online P2P Lending mania a few years ago, I remember Disruptionistas raving about alternative credit scoring models based on social media profile etc. and threatening banks with extinction for using their dowdy old FICO credit scoring models.

It tickles me that the the wheel has come full circle, with people now questioning the alternative credit scoring models used by BNPLs.

Where on earth did you get the free credit idea from?  didnt your parents teach you that nothing comes for free?  the cost of this is not being paid for by the VC's, its not being paid for by the Staff and Execs at Klarna, its not being paid for by the people who get into bad debt and commit suicide. - Predominantly the poor/disadvantaged/marginalised/desperate/minority groups (see UK Citizens advice bureau report) ..... its being paid for by the general public who will see costs passed on by the merchant to the consumer...  Not sure exactly where you stand on this, but it seems to be on shaky ground

LOL rich of you to stay anonymous and talk about my parents. But I won't hold your upbringing against you.

Merchants incur lower processing cost for debit card compared to credit card, yet I don't know a single merchant who passes on the lower debit interchange by way of discount to consumers paying with debit card. Likewise, they may not pass on the higher cost of BNPL to consumers. 

When I pay fees or interest for other forms of loans, the merchant can still pass on some cost or the other to the general public.

None of this is under your or my control. 

Therefore, as long as I don't pay any explicit fees or interest for BNPL, it's Free Credit. Period. 

ICYMI, merchants pay higher MDR for BNPL because it improves their browser-to-buyer conversion rate and helps them to save on other forms of marketing costs.