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Is ″Buy Now, Pay Later″ the consumer credit magic bullet we’ve all been waiting for?

BIScom Subsection: 
Nigel Morris-Cotterill

Buy Now, Pay Later is a rapidly growing consumer credit sector. Last year, it is reported, it was used in 3.6% of retail sales in the UK. Is it a panacea or a plague?

Long Read: 17 pages.

Buy Now, Pay Later is marketed as a benign form of credit and has overcome its early reputation as a prop for the poor and it is, mostly, a valuable addition to the portfolio of credit options. But not everything in the Buy Now, Pay Later garden is rosy or, even, smells right.

Buy Now, Pay Later is an interesting mix of credit, and quasi-credit, schemes that have been developed over many years.

Retail credit started with the simple process of a weekly or monthly account, paid in full with no interest. It was a form of financing within the community: a corner shop, for example, would let a customer pick up shopping to be paid for out of next week’s wages or next month’s salary. The distinction is because wages are paid weekly and salaries are paid monthly.

It was self-policing: no one wanted to be known amongst their neighbours as a debtor. And, mostly, it worked so long as e.g. a steelworker or miner didn’t drink it all away on his way home.

That’s why many companies paid wages on Thursdays: the biggest drinking night was Friday and gambling on horses was on Saturday. By paying the wages on Thursday, there was a greater chance of the money reaching families.

Pubs and bars have long allowed regular customers to run ″a tab.″

But call it what you will, it was an account, usually interest free. Ownership of the goods passed on delivery.


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