What: An article rounding up what needs to be known about Buy Now Pay Later solutions and their risks

Why it is important:  Such services have massively expanded in the last years as they are extremely attractive to younger customers. However, they might be as well putting them at risks via a seemingly harmless way of accumulating debts, which might end up questioning the responsibility of the institutions, brands and retailers proposing such solutions in the midterm.

Buy Now Pay Later solutions (read the IADS exclusive on this topic) are gaining ground across the world, thanks to their massive adoption by Millenials and Gen Z customers. It allows to have access to a somewhat old-school credit, but in a new format, with less controls, and probably higher risks for customers.

Paying with instalments is not new as it appeared as early as 1840 from piano manufacturers. However, until BNPL, to have a credit, applicants needed a credit check, involving a credit card with the costs associated and some red tape to do. The difference here is that using a BNPL solution is as simple as a click on an app, all the more that the delayed payments are interest-free (the BNPL operator charges the seller instead of charging the buyer).

The article argues that BNPL solutions are dangerous, as the verifications methods are less important than in the case of traditional credit, putting final customers at risks of drowning into seemingly affordable and easy purchases, translated into hefty debts at the end. According to the Australian Securities and Investments Commission, 15% of BNPL users had to resort to a traditional loan to pay off their BNPL debts. All across the world, regulators are now turning their eyes to these services to evaluate how harmful they can be on the long range.

How Old-Style Buy Now, Pay Later Became Trendy ‘BNPL’ QuickTake