![]() companies “are not providing the same rights and protections … that credit card companies provide,” according to a statement by the agency’s director, Rohit Chopra.įor these and other reasons, public and private markets have punished B.N.P.L. And a September report by the Consumer Finance Protection Bureau concluded that B.N.P.L. regulation this year in Britain, where some consumer rights campaigners complain the service is marketed as a benign payment option but is actually debt. Plans are underway to strengthen B.N.P.L. providers handle late fees, customer privacy and disputes. Regulators are ratcheting up scrutiny, tooĪt the same time, regulators are beginning to act on concerns about how B.N.P.L. Increased competition is expected to drive down margins even further, as merchants drive harder bargains with the army of providers. In June, Apple announced a plan to enter the market, although its rollout has been delayed until later this year. has become more popular, however, more and more companies - from American Express to Citibank to PayPal - have muscled in. Ahead of its initial public offering in 2021, Affirm flagged its reliance on Peloton as a business risk, noting its biggest merchant partner accounted for more than a quarter of its revenue.Īs B.N.P.L. In the early days of the lockdown, Peloton exercise bikes were a popular purchase for B.N.P.L. users were young women buying clothes and beauty products, and the option then grew among consumers of all ages, for any imaginable purpose or product. What happened? Initially, the heaviest B.N.P.L. players, Affirm and Afterpay, have never turned an annual profit Klarna says it was profitable in its early years. “If all you’re doing is offering the ability to break a purchase up into installments, we don’t think, long term, that’s dynamic enough.” Two of the other big global B.N.P.L. “Candidly, ‘buy now, pay later’ is just a feature,” David Sykes, Klarna’s chief commercial officer, told DealBook. ![]() The company has slashed jobs, and its valuation has plummeted to $6.5 billion, according to The Wall Street Journal. That may have helped it make inroads into the United States, but it has since fallen on harder times. It lined up Maya Rudolph, the former “Saturday Night Live” actress, for a 2021 Super Bowl ad (average cost: $5.5 million for a 30-second spot). The Swedish company, started in 2005, hit the U.S. company, until recently was the largest start-up in Europe, with a valuation of $45.6 billion. The industry is now facing an existential crisis, as profits remain elusive, valuations plummet, competition increases and regulators ask tough questions about the lending practices behind B.N.P.L. Passing higher costs onto customers may be difficult: Those who like the idea of paying for a jacket or a dishwasher in installments may not be willing to pay extra for the privilege. ![]() ![]() providers rely on loans for the money that they lend to customers for free, and with rising interest rates, those loans have become more expensive. accounted for 3.8 percent of North American e-commerce transactions in 2021 and is projected to grow to 8.5 percent by 2025.īut what once seemed like attractive economics have been upended. The growth should continue according to Worldpay, B.N.P.L. ![]() was one of the fastest-growing areas in financial technology for years, spawning Europe’s most valuable start-up, Klarna, and promising to revolutionize how we consume and how banks could reach tech-savvy new market segments. Goldman’s troubles with GreenSky are indicative of a cloud hanging over the sector. Revenues were up, but the division lost $1.66 billion in 2022. Goldman closed its $2.2 billion acquisition of GreenSky, a pioneer in the “buy now, pay later” (B.N.P.L.) lending sector, in March, calling it a key piece in its strategy to build “the consumer banking platform of the future.” It flew under the radar until last quarter, the first in which Goldman broke out earnings for its “platform solutions” business unit, which includes GreenSky. On a call that morning, analysts peppered David Solomon, the bank’s C.E.O., with questions about its consumer banking strategy, and about one unit in particular, GreenSky. The share price fell 6 percent after the Wall Street giant reported its worst earnings miss in a decade. Last Tuesday was a rough day for Goldman Sachs. ![]()
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