A couple of months ago, I posted about the Buy Now Pay Later model, whether it was turning into a trap during these times of inflation and financial struggle.
Studies show that more and more people are using BNPL to purchase essential goods like food and toilet paper. This indicates how the model is spreading among the financially vulnerable, which in turn are the ones more likely to miss repayments.
Don't we forget that BuyNowPayLater is still not a regulated form of credit, unlike consumer loans or credit cards.
This brings risks:
❌ It might cause vulnerable people to get into financial trouble, very quickly.
❌ BNPL was meant for non-essential purchases, in a time of cheap cash and consumerism (and lockdowns). The tide is turning, and there's not much profit in financing who can not repay.
The news of Affirm and Klarna drastically dropping their valuations were among the hottest of the summer.
So, is Buy Now Pay Later here to stay?
Hard to tell. But this video from the Financial Times gives an excellent input: what if BNPL transitioned to B2B?
Surely, it would lose some of its glamour (maybe that was the whole point?), but probably it would be more profitable and resilient. And I would also add, more innovative. B2B supplychains are in extreme need for digital innovation.
Either way, it is definitely a space to watch closely!