The Ever-Shifting BNPL Narrative

It’s Black Friday. And for many people, this means getting an early start on holiday shopping. And worrying about how to pay for it all. Though at this stage, Black Friday hardly qualifies as early shopping. 

Shopping isn’t really my thing. I don’t like shopping for myself, much less for others. I am just barely more enthusiastic about receiving gifts.

Nor do I even take much interest in shopping as a subject to write about. Except for one aspect of shopping. And that is payments. 

I’ve developed a fascination with how the payments ecosystem, via the instrument of buy now, pay later, has essentially done an end run around the credit system in order to lend money to (mostly younger) people who want more stuff. More shoes. More designer jeans. And more consumer electronics. Over time this has evolved from consumer goods to travel, health care, B2B goods and services. BNPL is even being applied to rent in some places.

There has been a general shift in using BNPL from discretionary/luxury goods to everyday necessities like groceries and fuel. 

As the use cases for BNPL have expanded, the media narrative around BNPL has shifted. 

I use Google Alerts to curate a daily news summary in my Gmail inbox.  As “buy now, pay later” is one of the many keywords or phrases that I track,  I have had a front-row seat to the gradual but dramatic narrative shift from “BNPL is popular and growing” to “BNPL is a danger to consumers.” 

Ep. 24 Kicks Around MSFT AI & BNPL Regulation

Brimming with Warnings

Given it is Black Friday, my BNPL alert was brimming today with content that reflects the current narrative about BNPL. Which is that the payment method, while still popular, represents a risk to consumers. 

Here are just a few of today’s headlines. 

“Why buy now, pay later options aren’t necessarily better than credit cards”

“Want to buy now, pay later this holiday season? Ask yourself these 5 questions first”

“Money worries push some shoppers to tighten budgets while others buy now, pay later”

In fairness, this narrative shift has been evolving over the past few years. And we’ve been tracking it here on Localogy Insider. Black Friday headlines related to BNPL last year were quite similar to those we found this year. Even  2021’s headlines included some of the now commonplace risk warnings about relying on BNPL for holiday shopping. 

Popularity Persists

Yet BNPL persists. These dour articles waving consumers off irresponsible spending in the guise of zero-interest loans (the essence of BNPL) wouldn’t be so prevalent if BNPL wasn’t still an incredibly popular way to drink champagne on a Target budget. 

According to a forecast from Stratis Research, the global buy now, pay later industry will grow from US$255.5 billion last year to $3.9 trillion in 2031.

While BNPL has become increasingly controversial (as reflected by the negative headline trend), its continued growth and popularity shouldn’t be too much of a surprise. 

While regulators in Australia have started to treat BNPL as any other credit product, UK regulators stepped back from taking similar measures. 

UK Pumps the Brakes on BNPL Regulation

Why? For fear they might remove a zero-interest credit product from the market, and potentially harm consumers. Or at least receive blowback from consumers who rely on the loans to pay for goods and services. 

That sums up the dichotomy of BNPL as a player in payments. On the one hand, consumers love it for its ability to deliver immediate gratification while delaying the pain. But the pain does come. That is why consumer advocates and regulators around the world continue to raise the red flag and warn consumers that BNPL  can be a very enticing trap.

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