Buy Now, Pay Later — What’s The Deal?

Contentworks Agency
5 min readFeb 13, 2023

Buy Now, Pay Later (BNPL) is a service that’s becoming increasingly popular as inflation and the cost of living crisis kicks in. Today we’re going to explore this industry, before giving you our usual rundown of the fundamental market fun that we all have in store this week.

What is Buy Now Pay Later?

Buy Now, Pay Later or BNPL is a short-term financing service allowing consumers to buy goods over a set period of time with no (or a very low) interest rate.

These services are popping up all over the place, playing into the hands of people that want to maintain their way of life and purchasing power, yet also have to grapple with rising inflation, and interest rates that are creating a cost of living crisis, as we sit at the start of what many think is the next recession.

So, a point-of-sale short-term loan with no interest. Really? How does that work?

How does BNPL actually work?

Generally, these services offer short-term loans with fixed payments and no interest. You may make a small down payment, say 10–15% of the total cost, and the remaining balance is split into even payments spread out over a specific time period, e.g. over a few weeks or months.

Additionally, most BNPL companies only run soft credit checks, which don’t affect your credit score. It really sounds too good to be true. But, nope — generally speaking, that’s how it works.

Like all loan agreements, consumers should pay close attention to what they’re signing up for, though. If the payment schedule is weekly, then that’s when you need to pay. Missing a payment could result in late fees.

BNPL loans don’t add to a consumer’s credit card debt, but they do add to their personal loan debt.

Who are the biggest players?

Here are a few of the BNPL industry’s heaviest hitters

ZIP

Zip is an Aussie BNPL that also offers its services in the US. It’s one of the largest BNPLs around and offers consumers a simple four-instalment plan. Big-boy platforms like Amazon, Zara, and Apple allow the option as a payment method on their platforms. In case you’re wondering — why Australia? Well, interestingly Australia is the epicentre of BNPL. The market has developed rapidly there and the nation leads the world in terms of uptake. It makes sense, then, that all the biggest players are present in that market.

Share price 01.01.2023: 0.56 AUD

Share price 10.02.2023: 0.60 AUD

YTD change: +6.3%

Source: Google

Splitit (SPT)

Splitit was founded in 2012 and is headquartered in New York. It also has subsidiaries in Australia and the UK. It’s an interest-free BNPL service that specifically targets the education, automotive, and jewellery industries. The company offers up to 36 monthly instalments.

Share price 01.01.2023: 0.17 AUD

Share price 10.02.2023: 0.19 AUD

YTD change: +11.7%

Source: Google

Sezzle (SZL)

Sezzle’s HQ is in Minneapolis, Minnesota. This BNPL targets cosmetics, apparel, health, furniture, and other purchases. Sezzle offers 0% APR, but missing a payment will lead to a $15 late fee.

Share price 01.01.2023: 0.41 AUD

Share price 10.02.2023: 0.56 AUD

YTD change: +37.8%

Source: Google

PayPal (PYPL)

Yeah, that’s right. PayPal, one of the world’s largest payment platforms, also offers a BNPL service. PayPal offers many different payback options which depend on the cost of the goods you’re buying. For purchases less than $1,500, you’ll receive 0% APR over four instalments. Purchases up to $10,000 can be charged as high as 29.99% though.

Share price 01.01.2023: 74.58 USD

Share price 10.02.2023: 80.80 USD

YTD change: +8.34%

Source: Google

Affirm (AFRM)

Headquartered in San Francisco, like PayPal, Affirm offers different types of BNPL products that range from 0% APR — when making up to 4 instalments — to up to 36% APR.

Share price 01.01.2023: 9.10 USD

Share price 10.02.2023: 12.52 USD

YTD change: +37.5%

Source: Google

Let us know what you think!

How do you feel about BNPL? Have you used a similar service? Let us know by tweeting us at @_contentworks.

Top fundamental events week commencing 13.02.23

This week looks busy in the middle, with little else planned at the beginning or end. Tuesday will be a particularly busy Valentine’s Day — you’re welcome for the reminder, by the way.

Monday

No major events are planned.

Tuesday

● AUD — Westpac Consumer Confidence Index (FEB)

● JPY — GDP Growth Annualised Prel (Q4)

● GBP — Employment Change (NOV); Unemployment Rate (DEC)

● EUR — GDP Growth Rate QoQ 2nd Est (Q4); GDP Growth Rate YoY 2nd Est (Q4)

● USD — Core Inflation Rate YoY (JAN); Inflation Rate YoY (JAN)

Wednesday

● GBP — Core Inflation Rate YoY (JAN); Inflation Rate YoY (JAN)

● USD — Retail Sales MoM (JAN)

Thursday

● AUD — Employment Change (JAN); Unemployment Rate (JAN)

● USD — Building Permits Prel (JAN); PPI MoM (JAN)

Friday

No major events are planned.

Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.

Speak soon!

The Contentworks team

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Contentworks Agency

Contentworks Agency provides compliance friendly content to banks, forex brokers, fintechs and many other sectors.