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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.


The account system was adopted by catalogue companies. Interestingly, in the UK there used to be three dominant catalogue companies, Freemans, Littlewoods and Great Universal Stores. The latter, later known as GUS, discovered that they had built up a profile of millions of households. They knew when someone started buying things in anticipation of a new baby and they were able to follow that baby right until he left home and, even, through university by targeting advertising for what mothers (it was predominantly mothers who held catalogue accounts) would need as their family grew and grew up. GUS noticed something else: they had a credit profile of all of those customers. That credit analysis business was spun off and is what later turned into Experian which, I suspect, every one of my financial crime risk and compliance readers and listeners, wherever they are in the world, knows about.

The catalogue model charged no interest (although goods were often a little, but only a little, more expensive than might be found in shops) and it did not charge interest.

Catalogues were popular for more reasons than the provision of credit: they made a massive range of products available to those living in rural areas and even small towns where many items and brands were simply not available in shops. Ownership passed on delivery. Payment was made over a period of weeks.

Customers had a credit limit which increased over time as they proved themselves good customers.

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