This is not rocket science. Can you connect the dots? Link here.
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Re-Posting
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.
