🌱 is BNPL good or bad?

Capitalism runs on consumerism. You earn money when people pay you for goods or services. Therefore, it’s in every corporation’s best interest to convince you to part with as much of your money as possible without them killing you.

That’s the traditional, fiscally responsible view to products like credit cards, which will charge you $124 over a year for a pair of $100 boots today. And it’s true. If you can afford $100 boots, do not add to your credit card debt. But there is a case to be made for the people who can’t afford it. I’ll let Terry Pratchett explain, albeit in 1993 dollars:

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

Terry Pratchett, Men at Arms

Is $124 for a pair of boots that lasts years better than repeatedly buying $50 boots that fall apart? Definitely.

That’s what puts me on the fence with buy-now-pay-later, the glorified credit card product that’s got fintech agog. On the one hand, if a high quality sweater or exercise equipment is now available to you, that can be a great thing for you and for the environment! The fewer worn-out $10 jeans in landfills the better.

But at the same time, if you’re going to wear your $60 jeans twice and spend a year paying $78 for them….you’ve been played. And those BNPL earrings only benefit you if they replace other spending, not if it’s additive. But that’s not how they’re going to be marketed. No, companies obscure how much debt they’re squashing you under until it’s too late.

There’s also an element of “[[🌰 the future is rented]]” to this. You’re paying 3-5% extra a year to “rent” your house until you pay it off. You’re paying $15 - $20/month to “rent” the movies you watch, the music you listen to, maybe even the audio or ebooks you consume. And now you’re paying 24% extra a year to rent-to-own your clothes. We no longer get to own things. We must instead owe them.

Related to:
- [[🌰 the future is rented]]

commonplace booklet

From BNPL is Good; I will die on this hill - by Simon Taylor:

The fact that people who use BNPL also experience financial stress is a correlation, not causation.

Is BNPL better or worse than credit cards? It’s better for low-income or consumers without credit scores han a high APR credit card. It’s not as flexible; it can’t be used everywhere, but it’s also not nearly as confusing or easy to get into trouble with.

BNPL has item-level data for everything customers buy.

It’s ad tech meets Fintech.

An unrelated from reading the article: if the product doesn’t last and it took you months to pay it off…I wonder if this incentivizes better-quality products. Because I will complain to friends if your fancy sweater pills sooner than I’ve paid it off.

Every post on this blog is a work in progress. Phrasing may be less than ideal, ideas may not yet be fully thought through. Thank you for watching me grow.