Buy Now, Pay Later -- June 16, 2022

The next big thing. Although it's been around forever.

Link here.

Now, PayPal will expand BNPL significantly.

Without question, to stay relevant, MC, Visa, Discover, et al will have to offer buy now pay later options. 

Reminder: Apple, Inc. offers BNPL. 

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BNPL

A reader sent me a link to a story regarding buy now, pay later (BNPL) plans. 

My not-ready-for-prime-time response:

Home Shopping Network or whatever those 24/7 marketing shows are called, have been doing this for decades: "four easy payments." Sometimes, "three easy payments." 

Late night television ads, same thing: "four easy payments." 

I only get my cars serviced at Firestone. Their policy is no interest whatsoever on any charge using their Firestone credit card (which I have) if the charge for service is more than a couple hundred bucks (I forgot the threshold) and is paid off within six months. So, same thing as BNPL. So, my car servicing costs are not put on any credit card the Big Banks would love to have. 

USAA -- car insurance -- same things -- I get a new bill every year or every six months --  I forget -- but I never have to pay it in one big payment. I'm given four months to pay off the six month premium. I generally pay it off in three months and have no car insurance payments for three months. This is another big bill that I don't put on any credit card that the Big Banks would love to have. 

Colleges and universities generally allow folks to pay tuition payments over several months; car insurance policies, noted above, are definitely BNPL. 

When BNPL is used occasionally, it's wonderful, but the risk is that millennials will use this for everything and gradually their debt will increase significantly and they won't notice it until too late. But I'm not sure how that's any different than maxing out all your credit cards with 24% APR. Having said that, I am not aware of any Big Bank credit card that sends you a reminder that explicitly says that if you don't pay the full amount by today, "we are going to charge you 24% interest tomorrow." 

My hunch is that BNPL plans have very explicit notifications in a timely manner.

But all this talk about BNPL, it seems, we've had it forever. 

What I would like to see is for Apple Computers to go to a subscription service on their computers. I believe some telephone plans already do that: you pay a monthly subscription price for your smartphone and it's automatically upgraded every two years. Obviously over time the monthly subscription price goes up but it's slight and generally not notices. 

When all of sudden I see all these stories about the dangers of BNPL, my antennae go up, asking who will most be hurt by BNPL? Unless they do the same thing, M/C, Visa, Discover, etc., could be the big losers. There is a reason the major credit card companies don't offer BNPL when they get 24% APR on delayed payments. 

One gets the feeling these "news stories" are in fact press releases faxed / e-mailed to media outlets who are too lazy to do their own reporting / investigative reporting and simply re-print the press release as a news story.

Whether this all blows up in a year or not, it's obviously something that consumers want.

I think it's brilliant: the big companies, like AAPL and AMZN (who doesn't offer this yet) are willing to fund this themselves since they have deep pockets. I know that when I buy my next AAPL computer (probably next spring, the new MacBook Air) I will gladly pay for it over four months, interest-free.