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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 borrows part of its concept from commercial finance.

To complete the picture as to the genesis of Buy Now, Pay Later, we have to look beyond consumer credit.

If we turn for a moment from consumer credit to trade or commercial credit, there is another development: factoring or invoice discounting.

In invoice discounting, a finance company lends to the merchant a percentage of the merchant’s outstanding sales invoices. The merchant is responsible for collections.

In factoring, a finance company buys, at a discount (so that’s confusing) the company’s outstanding sales invoices. The finance company is principally responsible for collections although that is not always the case.

In neither case does the finance company buy the goods.

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