The Fall of Buy Now, Pay Later
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- čas přidán 29. 08. 2024
- Buy Now Pay Later is crumbling. A payment model that was once the darling of the fintech industry is almost all but over. Companies like Klarna, Afterpay, Openpay, Affirm and Zip have lost billions.
While on the surface it looked successful, underneath lay serious problems with the business model. In this video we explore what went wrong.
Buy Now Pay Later (BNPL) is a type of debt that allows consumers to split the cost of an item into 4 interest free payments. While it sounds good, it leads to higher average order values, higher conversions and more frequent shoppers. Good if you're the retailer, bad if you're the shopper.
James Alexander.
So too long; didn't watch: buy now pay later is falling apart because they are middle men who forgot middle men survive by charging more than the source. They take out debt for you, and pay the interest you are avoiding. But they don't charge enough to cover the interest.
Thanks for the ADHD response ❤
Great video. Very insightful. One small addition... at 5:24 you are correct to assert that the cost of borrowing does go up when there's inflation -- but the cost of the t-shirt itself also goes up due to inflation. So not only was it more expensive for BNPL companies to borrow money, but also, the amount of money that BNPL companies needed to borrow went up.
Good point! Thanks for the comment :)
It's super cool to know the background info on these companies! Nice vid
I think a lot of people are missing the mark on this topic. The simple reality is our only other alternative as consumers is credit cards which are predatory and compound out of control if not managed correctly. BNPL has safety barriers in place that protect people from ever ending up in spiralling debt by freezing your account upon your first late payment or charging a capped late fee (capped being an extremely important part). On the merchant side they provide marketing services and online traffic via their platforms (website & App) in addition to increased cart size etc. The present arrangement for merchants is that they just pay card companies a fee for processing the transaction, so at least in this way they are benefitting from the marketing channels as well. It is an improvement on our current options no matter which way you look at it.
The next only thing I think a lot of them will struggle with is differentiation and creating some sort of preference for their product when most are identical. It will probably come down to whoever grows the fastest first, is able to build trust and able to brand well.
Anyway, I see a lot of these videos demonising BNPL it just doesn’t make sense to me when you look at our current options…
These fees that people end up paying with BNPL services are higher than any credit card interest incurred within the same period, not to mention the potential of earning rewards on your purchases with credit cards.
For the financially savvy, credit cards are king
@@RickyBobbyGetEm But most people BNPL becuase they can spread the cost over 3 months without paying anything. On a credit card, you'd never be able to do that. You're less likely to end up paying the fee if you can spread the payment over 3 months interest-free.
Affirm charges interest on 6-12 months purchases
I make $100k+/yr; I can go to the swapmeet and buy used brand clothes for $1 a pop.
Can you make a video on Apple Pay Later and how that works and why Apple did it in the first place?
Pretty solid and informational video, surprised to find it with less than 1k views after a day. I guess maybe the blessing of the algorithm might fall upon you, unless it's become more targeted than it was in the past. Either way, good luck!
Thanks! :)
Idk why this shit don’t have more views
Algorithm Gods.
@@lombardo141 probably
The buy now pay later is worth it BUT you have to make sure you don't buy too much.
Yeah consumers need to be responsible and not abuse these services.
Also when bnpl charges 4-6% from merchants.... merchants transfer the burden to consumers by increasing the retail price of the product...😂😂😂....they don't pay from there pocket
This is quite big in New Zealand atm, must be around 20% of peoples using it.
Thanks for the video james. There should be a credit scoring check and default insurance to minimise the risk of bad debts. Unless if BNPL skip these stages for cost cutting.
Insightful stuff. As always, moderation and keeping yourself in check is key, but a total financial meltdown caused by the others is out of your hands. Hope it doesn't lead to it.
if you can't buy something as cheap at a t shirt in one installment why would you trust that person to make installments?
Blitzscaling is such a joke lmao, this was a great video why the hell does it have less than 200 views 20 hours later...
Thanks! Glad you enjoyed it :)
The one of reason why Buy Now pay Later scheme lending models is falling is because of government regulations around responsible lending etc
Why so few upvotes? Greate video. Clearly unsustainable. The fundamentals are not very different from the crisis of 2008
do you want to know where this story is going? look at the brazilian market, which has had "buy now pay later" solutions for decades, and see the extremely high revolving interest rates practiced.
Sound like one of the epic loss (Company) loss (User) business model
Hey James are you looking for an editor?
Hey! Not at the moment. Currently doing all the editing myself but maybe in the future :)
@@JamesAlexanderYT Alrighty
Great video!
Thanks!
do you regret making this video now after what's happened the past 4 months in BNPL?
Chances are that you didn’t have affirm stocks? How do you feel now?
Buy now pay never.
Giving credit to the millennials and gen Z who in the states refuse to pay there student loans, how could this turn out bad.
Young people are getting ripped off and ruining their credit.
I use these, and my credit score is almost 800....... I only use these on huge purchases like an engagement ring that I can easily pay for, but I don't wanna all at once
do you guys have any idea how it could have possibly work? i think hiring gang members to eliminate bad debt, then uping the 4% to 10%, finale raising cash mountain just like wework. Pls share your thoughts on this, i would appreciate it.
Don’t see a fall here