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

BIScom Subsection: 
Author: 
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.

The ideal system

The ideal system would be this:

a) a finance company opens a risk assessed account for a customer with a credit limit of, say, 100. It issues a debit card to the customer.

b) the customer makes a purchase of 25 which creates a liability in the debit card.

c) the finance company pays the merchant in a scheme that is, in essence, factoring so the merchant gets x% of 25.

d) the customer is not charged interest and is not charged late fees or penalties. However, there is a recoverable debt.

e) the customer takes ownership and delivery on the spot when his card payment is made.

f) the customer still has 75 available to him. When he pays the 25, his available balance goes back to 100.

There is, then, absolutely nothing new in any of this.

And that’s what is now being lauded as ″Buy Now, Pay Later.″

It’s simple and it’s the darling of many on-line shops (which, when you think about it, are only catalogue stores that don’t print on paper) and an increasing number of brick-and-mortar retailers.

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