Oddbean

In Australia, they are typically interest free. You just repay it in four instalment payments. I believe they make money through charging late fees and selling purchase history to data miners. I guess that could arguably be cheaper than a traditional credit card that would charge interest for carrying a balance for the same duration of time you're spreading out the BNPL payments. Paying outright would be best, but I guess if you know for certain you'll have the money for each repayment then you might be able to play the BNPL game to make your money go further in order to buy more in a shorter period of time.

Thanks, understood, but for the provider making money on selling data can't be all that much revenue, or do they sell the debt on to brokers or funds too? Because how do you manage the debt book, that costs money to chase up delinquent payments or do repo goods if that is even possible, doesn't seem like the most sustainable business model without strict access to this payment option, but if you strict you limit your reach of customer base

💯- they don’t give a toss about repo either and the default process is largely automated. The fees AND huge interest rates (after the interest-free period expires) cover that and more. Scale all that up to millions of users who choose this option entirely BECAUSE they don’t have the money and you’ve automatically captured the ideal customers who are more likely to not make/miss a payment.

For sure if you can automate the admin, you can reduce a lot of the cost versus traditional debt collection and I guess they have a certain repayment rate they are happy with if a few suckers are paying it back, it can cover some that dont

Okay now you're starting add the pieces to the puzzle, so they're banking on overcharging the customer, reminds me a lot of those rent to own places where you can buy a appliance for say $30 a month, but at the end you paying $400 for a $120 appliance I found this video on YouTube talking about the biggest firms in the BNPL space, also firms that pitched themselves as tech companies, so they managed to raise insane amounts of money without needing to show much upfront revenue https://www.youtube.com/watch?v=R1JaMRpcDrQ

I don’t see the attraction of using AfterPay etc for small purchases like some people do but I have use other BNPL services in the past for larger (furniture) purchases. Basically for exactly the reason you say, allows spreading the cost out without credit card interest. For me it was really just a way to avoid draining savings after having just bought a house and I was comfortable about making the repayments.

Yee exactly, can be very useful like that. I think part of the attractiveness is it is also supported almost everywhere. And it likely encourages more sales for businesses who offer it at checkout as people can do as it says "Buy Now, Pay Later" lol. Instant gratification.