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BNPL is often free to the customer [1], to whom it amounts to a free loan. The merchant, however, is soaked for the interest/fees. So merchant prices will rise
by kardos 2y ago
BNPL is often free to the customer [1], to whom it amounts to a free loan. The merchant, however, is soaked for the interest/fees. So merchant prices will rise slightly, for everyone, to cover those costs..... much like credit cards do now. Cash and debit users subsidize this scheme without getting the free loan.
The downside for the customer is that it promotes overspending, which could be argued as a net negative on the whole. A careful consumer could make use of the free loan, investing the cash elsewhere during the loan period.
[1] https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
- rcxdude 2y agoYes, much like credit card benefits and cashback, if you don't take advantage of it, you're effectively subsidising those who do. (In fact, if someone ypu buy from starts offering it and you disagree with it, you should switch to using it, since this will oncrease their fees on existing revenue and maybe make them consider it not worthwhile.)
- nullfield 2y agoAlso from Bits About Money: https://www.bitsaboutmoney.com/archive/anatomy-of-credit-card-rewards-programs/ https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car... The operative quote in support of this from the link, in support of subsidizing those who don’t and almost more damning because even cash users are subsidizing it as the overall price gets raised to roll in the cost of all the people who do use CCs: “Credit card issuers explicitly and directly charge the rest of the economy for the work involved in recruiting the most desirable customers.”