Buying Bullsh*t In "4 Easy Payments"
Submitted by QTR's Fringe Finance
I have been gently touching on what a horrible idea one sector has been since the inception of this blog. And just this week, it looks like cracks are starting to form in the space via one of its largest and most well-known publicly traded companies.
As savings finally dry up, rates remain higher and auto loan/credit card delinquencies start rising, I wouldn’t be surprised to see a deluge of ugliness from these types of names in their next few quarterly reports.
(Chart: Zero Hedge)
I’ve said how buy now pay later “BNPL” has been a terrible idea since the inception of this blog. More recently, I named BNPL as one of the 10 areas of the market I would avoid heading into 2026.
Strip away the fintech branding, slick apps, venture capital language and the promises of “disrupting” traditional finance, and a large portion of the BNPL business boils down to something that has existed for centuries: lending money to people who don’t have enough money. And in many cases to people who don’t have enough money for a reason (i.e. they aren’t earning enough or can’t find a way to underconsume).
There is nothing particularly revolutionary about lending money at egregious rates to people who don’t have any. But when you start extending tiny amounts of credit so consumers can finance increasingly trivial purchases, whether that’s a burrito, groceries, takeout or other everyday expenses, you aren’t witnessing some great innovation in financial technology. You’re witnessing the last gasp of liquidity breath from a consumer in deep financial stress.
Credit makes sense when it bridges the timing between income and a major productive purchase. Mortgages allow people to buy homes. Business loans finance investment. Auto loans can help people purchase transportation they need to work. But when consumers increasingly need financing for a single solitary order of Large Fries from McDonald’s and other minute daily expenses, the economic signal is completely different.
If someone needs four payments to buy a french fry, the problem isn’t the absence of a sufficiently innovative payment app. The problem is that they’re fu**ing broke.
That’s what has bothered me about the evolution of BNPL. The industry has attempted to present installment payments as a technological revolution. In reality, subprime BNPL increasingly resembles a digitally optimized version of a very old business: payday lending, high risk consumer finance and, taken to its historical extreme, loan sharking....(READ THIS FULL ARTICLE 100% FREE HERE).