Buy now, pay later
Business Daily
BBC
4.4 • 816 Ratings
🗓️ 2 November 2021
⏱️ 18 minutes
🧾️ Download transcript
Summary
The future of credit for the young, or just another way of getting into debt? Would you pay for a product now, when you could simply delay payment for free? Ever since the pandemic forced millions of us to stay at home, millions more of us have been buying goods online using a new form of credit. Buy now, pay later offers goods interest free and it's proving very tempting to many younger shoppers. But is it just a new form of debt trap? Ed Butler speaks to Nick Molnar co-founder of Afterpay and Sebastian Siemiatkowski, the cofounder and CEO of Klarna, the Swedish based firm that's now the world's biggest buy now pay later provider. He also hears from Alice Tapper of personal finance forum Go Fund Yourself who says regulation is desperately needed to protect younger consumers. Plus Amber Foucault from the consumer spending analytics company Cardify who says that until global regulation comes in, we should watch out for many younger customers getting into financial trouble using this system.
(Picture: "Payment due!" written on a calendar with a bank card on top. Credit: Getty Images.)
Transcript
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| 0:00.0 | Hi there, I'm Ed Butler. Welcome to Business Daily from the BBC. Today, buy now, pay later. |
| 0:07.4 | The trend in e-commerce that's prompting younger shoppers to dump their credit cards and pay for everything in installments. |
| 0:14.6 | This consumer is spending money differently and when you don't charge interest and you're not trying to push someone or cross-sell a line of credit, |
| 0:21.9 | there is a fundamentally different relationship that you can build with this customer. |
| 0:26.2 | But is it really the future of credit or just another way of getting into debt? |
| 0:30.8 | This is very young people who have had no experience of any other form of credit before, |
| 0:36.3 | and this is their first interaction with that. |
| 0:38.6 | Can you expect all 18-year-olds to make perfect financial decisions? Probably not. |
| 0:43.4 | That's all to come on Business Daily from the BBC. |
| 0:49.3 | Basically, I moved house the beginning of this year. I was going from a one bedroom to a two bedroom. So I had to buy a new bed, a wardrobe. And then also I purchased a new sofa and a new dining table. |
| 1:05.9 | Emma Howling, a single mother from London. And obviously, because there was quite a few items that I needed, |
| 1:13.4 | I did find it was a lot easier to spread the costs, |
| 1:17.8 | but also didn't want to get caught up in a credit card and having to pay interest. |
| 1:24.0 | Which is why Emma decided to use the services of ClearPay. |
| 1:29.7 | It's one of a number of buy-now pay-later payment systems available in the United Kingdom and around the world. You just select the products |
| 1:35.6 | you want and the vendor lets you defer paying for them without interest for a number of weeks. |
| 1:41.7 | You have to be aware of what you can afford. You're not borrowing money |
| 1:46.0 | as such as that you're just stretching the time that you're having your own money. So you've got |
| 1:52.1 | to be aware that the money that you're going to spend, you have to have. A credit card, |
| 1:57.4 | you can spread and you pay interests and you can spread it for years. And so I went in |
| 2:03.9 | that knowing that was not the idea. A new form of credit. That's certainly the pitch and it's made |
| 2:09.2 | by now pay later a system provided to consumers at the point of purchase one of the fastest growing |
... |
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