Hacker News Reader

Comment by pylon | Hacker News Reader

As a customer are there any downsides to using these BNPL platforms when I'm buying something? I generally never buy anything online that I can't afford to pay for it outright so I have never used them before.

View on HN

> I generally never buy anything online that I can't afford to pay for it outright so I have never used them before.

They are designed to let people buy impulsively without annoying restrictions like not having enough money. Who would have though this was either an addressable market or a good idea.

I don't get why they are so popular either, or worth this much. They also don't have any moat - any payment provider can offer to do the same thing they do with less hassle for the customer (PayPal has started doing this for example). There are many direct competitors in addition (eg Zip).

Isn't that what a credit card is for? Or is it somehow different?

It is interest free, and also has a repayment plan baked in. The credit card user is incentivized to pay it off each month, but the Afterpay user is incentivized to buy more stuff now.

You might miss out on some credit card rewards or protections (chargebacks, extended warranties, extended return periods, etc).

Trickily, BNPL is pushed as 'not credit', which I find deeply disingenuous. The product they push is utilised by compulsive spenders, or poorer people. These people have always used credit, much to their collective disadvantage. Branding it as 'like lay-by, free up your cashflow' is in my opinion a dangerous option for many people.

It's rather paternalistic to assume poor people can't handle credit.

Are you kidding? Poor people of course cannot handle credit, because they don't have the cashflow or savings to prevent the use of credit in disadvantageous situations. I am not saying poor people shouldn't have credit, I am saying credit is most destructive for poorer people, and so any service that targets that market is exploitative of their misfortune.

> Poor people of course cannot handle credit

That starts you down a very slippery slope of what other things poor people supposedly can't handle, because of course you know what's best for them.

They would definitely be less poor if they could

The main one in the UK is that you lose Section 75 protection, which is what forces credit card companies to protect your purchases. The obvious others are if you buy something you wouldn't buy without BNPL (their business model is charging retailers on the basis that people in aggregate will), or you miss payments and get late charges/a worse credit score.

No, not really. I don't use it either. They do have late fees but even those are quite low and stop increasing once you hit a cap.

Yes. Sometimes a store will offer free returns when paying directly, but not when the item was bought through BNPL.

Pay it outright, if you can. It's usually the best way.

I might have misunderstood, but when I looked into this a while back the main downside is the loan amount shows up on your credit report. Even after you pay it off you now have this “credit” with the provider. This could affect, for example, a future mortgage application.

The rent-to-own storefronts moved online.

Reply on news.ycombinator.com