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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.

Cherry-picking the best bits from existing systems.

If we look at all of these varieties, we can see that there are various things that can be cherry picked:

1. the finance company, ideally, wants to avoid product liability. So it doesn’t want to buy the products and resell them to the customer.

2. the finance company, ideally, wants a credit relationship with the customer which is simply this: we lend you money to spend on whatever you want, whenever and wherever you want.

3. the customer doesn’t want to fall into the interest trap that credit cards, with revolving debt, creates nor to be subject to high penalties for late payments.

4. the customer wants the convenience of instant payments and collection or delivery.

5. The most convenient model is debit cards or prepaid cards but they don’t come with the guarantee that is afforded by Credit Cards: the consumer protection benefits are lost but this is a price many consumers appear willing to pay.

As credit card companies have become more selective over both who they will issue cards to and the limits they will apply, debit cards have become more popular. Also, because of the lower fees charged to merchants, many merchants give a small discount to customers using debit cards.

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