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"BNPL providers can offer zero-percent interest rates because they charge merchants three to four times the average credit-card processing fee." Right. And th
by MarkusWandel 4y ago
"BNPL providers can offer zero-percent interest rates because they charge merchants three to four times the average credit-card processing fee."
Right. And the vendor can't charge a higher price to the BNPL crowd, so they average it out over everyone. And thus the BNPL app user gets an "interest free" microloan, with everyone, even the people paying cash, having to pony up for the interest.
Just like credit cards with their incentive programs... the card companies are skimming 2-3% off the top anyway, might as well capture some of that for myself.
- mrjin 4y agoEven that was not quite right. Just take a look at those leading providers' financial reports, none would be pretty. They were virtually accumulating customers by providing heavy incentives using investors' money so that they could bump up the share price to allow early investors to exit. Making a profit was not even their secondary priorty.
- mountainriver 4y agoYup klarna is notorious for this, up to 100m dollar bribes!
- hestefisk 4y agoThe fees to the merchant can be quite exorbitant. That’s how the BNPL operators make their money.