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The Business Model Behind Buy Now, Pay Later Apps

How BNPL firms make money—and why regulators worry about debt.

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Retailers have long relied on credit cards and companies like Paypal to provide payment options for customers, but recently these services have faced some new competition. Firms like Affirm, Klarna, and Afterpay offer “buy now, pay later” models that can be an appealing alternative to credit cards. As the video below shows, though, these services could potentially be dangerous to consumers while also failing to maintain steady profits for investors.

Questions:

  1. What are the potential advantages and disadvantages of using “buy now, pay later” services? 
  2. Do you think services like Affirm, Klarna, and Afterpay will be able to compete with credit card companies in the long term? Why or why not?
Author: NickelsMcHughMcHugh