There has been a lot written about the Buy-Now-Pay-Later sector the last few years. It has been growing at 39% per year in the UK, and this form of deferred payment is spreading from its origins in Europe, to the rest of the world now too.
What is Buy Now Pay Later (BNPL)?
Buy Now Pay Later (BNPL) is a way for consumers to make purchases, and defer payments for them to a later period, either through installments or after an interest-free period.
This has been popular with online retailers and catalogs initially, although this is now expanding into high street shops too.
How does BNPL make money? What is its business model?
There are 5 key revenue streams for BNPL firms.
Merchant discount rate (MDR), i.e. fee merchants pay to BNPL firmsInterchange fees, if a credit card is used as part of the transactionFlat per-transaction feeLate feesInterest, if BNPL loan defaults to a traditional installment loan. Source: The Financial Brand
Without regular interest char...
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