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Klarna continues to strengthen, Square bought AfterPay, Amazon's partnering with Affirm, PayPal launched their own BNPL offering & acquired Japan's Paidy, and now Monzo & Revolut are getting in on the action too...

Which begs the question... Why?

What does 'buy now pay later' offer that credit cards don't?

Well, it offered retailers a way to stand out initially, and they picked up the tab in exchange for more sales (but now everyone's doing it...)

Read Now, Pay Later
Squareโ€™s purchase of Afterpay will probably work, but will always be seen as expensive. SNB printing and minting BILLIONS (while providing value to shareholders)

Aside from a way to get people to bring forward their spending, the unique BNPL use case is still up for debate.

A recent study by personal finance company Credit Karma found that a third of BNPL users had fallen behind on their payments, and 72% said that their credit score had declined...

Not exactly encouraging...

What's a retailer to do though?

So what if you they pay a slightly higher cost to the payment provider...

Just build it into the price, get your sale and the customer gets an interest free loan. Win Win! Gotta get those sales in... ย 

It's a global phenomenon...

Why Chinaโ€™s Youth Pay For Luxury With Credit | Jing Daily
Rising incomes and high consumer confidence have helped boost the China market. But thereโ€™s another emerging factor: consumer credit.

Luxury brands in China that fail to offer BNPL could be missing out on this evolving phenomenon.
Data from a US survey found that 42 percent of Gen-Z and 69 percent of millennial shoppers are more likely to purchase items if a BNPL service is offered.
Luxury brands need to accept that credit in China is an opportunity to be developed rather than a risk to be ignored.
Chinaโ€™s easy access to credit should continue to drive growth, and luxury brands need to take the initiative of providing mechanisms that open the doors to aspirational luxury consumers.

This thread adds another possible use-case... ๐Ÿ‘‡

I'm not entirely convinced that BNPL can replace the Visa/Mastercard duopoly in 'usefulness' terms, although there's no doubt that the competition in the whole payments space will intensify going forward.

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Is the true cost of the pandemic just waiting to be tallied?

Now, I don't really agree with much (or any) of that thread.

But it got me thinking...

There have been plenty of bankruptcies, even as debts have been refinanced at record low rates ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

Banks have been very upbeat about defaults and set aside less capital to cover losses since the recovery picked up speed at a faster pace than expected. ย 

While I can see why people would be concerned that there hasn't been enough 'pain' to say that the recession is behind us, they're likely underestimating the influence of low rates and the hunt for yield.

Refinancing assets became ridiculously easy...

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But not for everyone... ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

Most expensive home in America defaults on $165 million in debt, heads for sale
The 105,000-square-foot Bel Air estate, known as โ€œThe One,โ€ was placed into receivership by the Los Angeles County Superior Court.

A Los Angeles megamansion once expected to list for $500 million has gone into receivership after the owner defaulted on more than $165 million in loans and debt, according to court filings.
The 105,000-square-foot Bel Air estate, known as โ€œThe One,โ€ was placed into receivership by the Los Angeles County Superior Court and is expected to be relisted at a lower price in the coming months, according to people familiar with the property.
The receivership marks a stunning reversal for โ€œThe Oneโ€ and its flashy developer, Nile Niami, who often touted the property as his โ€œlife missionโ€ and โ€œthe biggest, most expensive home in the urban world.โ€

The developer's had trouble selling for quite some time, as this segment of an April interview shows...

Goes to show you need more than a positive mindset

The tour of the house is astounding (as is the commentary ๐Ÿ˜ฌ ๐Ÿคฃ)

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