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My next set of Clubhouse invites are "BNPL will kill credit cards"
TLDR answer:
BNPL is simply the cutting out of VISA/MasterCard by demand powerhouses like Shopify/Square/etc.
There's no magical better rates. They don't make credit cards look evil.
My next set of Clubhouse invites are "BNPL will kill credit cards"
TLDR answer:
BNPL is simply the cutting out of VISA/MasterCard by demand powerhouses like Shopify/Square/etc.
There's no magical better rates. They don't make credit cards look evil.
Q1. Is ur business model predicated on merchants giving u a cut ?
So how much pricing power do u have between cost of capital vs merchant pound of flesh?
Think Shopify & Amazon here...not small sites.
And remember Affirm had to pay billions in stock warrants to Shopify.
So how much pricing power do u have between cost of capital vs merchant pound of flesh?
Think Shopify & Amazon here...not small sites.
And remember Affirm had to pay billions in stock warrants to Shopify.
Q2. Is ur business model predicated on customer interest payments ?
Then are u following non-usurious credit practices ? Doesn't seem like it in BNPL today.
I don't understand the math on how credit revenue BNPL is cheaper than a CC.
Only ONE possibility https://www.politico.eu/article/klarna-payment-firm-scrutiny-buy-now-pay-later-business/
Then are u following non-usurious credit practices ? Doesn't seem like it in BNPL today.
I don't understand the math on how credit revenue BNPL is cheaper than a CC.
Only ONE possibility https://www.politico.eu/article/klarna-payment-firm-scrutiny-buy-now-pay-later-business/
BNPL is a fixed tenure loan. No revolving. Ergo it's cheaper. Absolutely nothing new here. Any loan is cheaper than a credit card cos of the lack of revolving flexibility.
So is there a set of customers who choose BNPL fixed loans vs
1. Revolving CC credit
2. Bank fixed loans
So is there a set of customers who choose BNPL fixed loans vs
1. Revolving CC credit
2. Bank fixed loans
Q3. If ur doing BNPL as revolving, it's not cheaper. Take a look at popular BNPL rates from Affirm (the most successful BNPL?).
Oh and @rshevlin fantastic article on BNPL psychology. Did u know 43% of BNPL users miss their payments? https://www.forbes.com/sites/ronshevlin/2020/11/22/the-24-billion-buy-now-pay-later-battle/
Oh and @rshevlin fantastic article on BNPL psychology. Did u know 43% of BNPL users miss their payments? https://www.forbes.com/sites/ronshevlin/2020/11/22/the-24-billion-buy-now-pay-later-battle/
However BNPL takes great pains to get regulatory arbitrage. And that is one of the key factors.
For e.g. BNPL doesn't need a lending license. And we don't need to report to bureaus.
So can you deny BNPL on the basis of religion/caste/gender? https://twitter.com/richardturrin/status/1333395884277719040?s=19
For e.g. BNPL doesn't need a lending license. And we don't need to report to bureaus.
So can you deny BNPL on the basis of religion/caste/gender? https://twitter.com/richardturrin/status/1333395884277719040?s=19
Oh also, this is a game that credit cards can play too.
Take a look at JP Morgan Chase's "no interest. Just a monthly fee" credit card.
Ultimately, as a customer you have to calculate the total you paid for your purchase. No automatic "interest is evil"
https://www.chase.com/personal/credit-cards/mychaseplan-hub
Take a look at JP Morgan Chase's "no interest. Just a monthly fee" credit card.
Ultimately, as a customer you have to calculate the total you paid for your purchase. No automatic "interest is evil"
https://www.chase.com/personal/credit-cards/mychaseplan-hub
So we come back to power of merchants controlling demand. Completely see why they want to own the stack & cut out networks.
how does this play out in long run?
I still think the Affirm-Shopify way
Pay the devil it's pound of flesh. But credit is too complex to be unspecialized
how does this play out in long run?
I still think the Affirm-Shopify way
Pay the devil it's pound of flesh. But credit is too complex to be unspecialized
So as a lending/card startup - that's what you try & balance.
"Titanomachy" of Shopify vs VISA/MC
Where do u sit? Do you think you can pull off a pound of flesh deal with Instagram?
Or do you pay your network tax & quietly build customer side first?
P.S. I have a third answer
"Titanomachy" of Shopify vs VISA/MC
Where do u sit? Do you think you can pull off a pound of flesh deal with Instagram?
Or do you pay your network tax & quietly build customer side first?
P.S. I have a third answer
One of the coolest, super long things u should watch is JP Morgan's genius payment analyst Tien Tsin Huang's call on valuing payments inside software. And the power of Shopify.
Before it gets taken down.
https://markets.jpmorgan.com/research/email/l42ivjop/mNkRV3AhL-vo86tgAZE8oA/KAL-1-IK898436
Before it gets taken down.
https://markets.jpmorgan.com/research/email/l42ivjop/mNkRV3AhL-vo86tgAZE8oA/KAL-1-IK898436
And bringing an India context here - the OCEN is an interesting play here. It doesn't eliminate BNPL pound of flesh - you still need to pay to get inside a Shopify.
It just makes integration easier. Very helpful for banks like HDFC
who seem to be technically challenged.
It just makes integration easier. Very helpful for banks like HDFC
who seem to be technically challenged.
