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Comment by AlexandrB | Hacker News Reader

> It allows any purchase between $35 and $1,000 made through Microsoft Edge to be split into four payments over a six-week period.

> While the service is being promoted as ‘interest-free’, some were quick to point out that all transactions are subject to a “$4 flat fee”.

$4 in fees on $1000 over 6 weeks is an effective APR of around 4% - pretty good. $4 in fees on $35 over 6 weeks is an outrageous APR of around 123%. I'm guessing Zip is hoping most people are closer to the latter than the former. I wonder what kind of cut Microsoft is getting.

[1] https://www.calculator.net/apr-calculator.html?cloanamount=3...

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Now web browsers are gonna become credit cards attached to your browsing history... Great job guys! :|

Ugh, who ever would have thought 2021 would have come to this.

Ugh, who ever would have thought 2021 would have come to this.

1980's cyberpunk writers

>> Now web browsers are gonna become credit cards attached to your browsing history... Great job guys! :|

The dark humor is that some of the developers responsible for today's horrible web experience are here on HN...

...and well understood the horrors of a Cyberpunk like dystopia in time.

Opera started offering payday loans in Kenya a few years ago:

https://allafrica.com/stories/202104090297.html

Just wait for what’s in store in 2022!

anyone paying attention.?

I don't think this have been downvoted, this is a really really obvious thing to do with the raging success of both Apple Pay/Shop Pay/Android Pay/Samsung Pay/Paypal and Afterpay and it's clones. From the financial perspective of the big three companies that make browsers they're nothing more than shopping portals and all new user-facing features built into browsers support the user-stories of people buying things.

Paypal & Shop Pay have the problem of getting people to let them store their CC info to upsell them on afterpay type stuff and CC offers -- browsers and $Platform Pay already have it so MS is bootstrapping their $Pay service via the thing they can control.

But the reason I use Apple Pay and Google Pay before that is that it is more convenient and I can avoid touching the PIN Pad. I pay in full immediately.

ive been readying about microtransactions for decades.

this is basically what thta is.

This is M$ we're talking about. Are you really surprised?

The overused acronym aside, MS does seem to seriously have issues building quality software because they lack focus. They always seem to get hijacked by forces in their own organisation dragging them off-track.

Like totally screwing up Windows 8 because some part of the company wanted to sell more tablets. Ruining Teams by adding so much functionality to it without a clear vision that it's become a slow and confusing mess. Now this, undermining the push for a clean and fast browser with what is probably just one VP pushing this to make a quick monetary win for his team.

This is one thing where Apple under Steve Jobs would shine. The company had one direction, one that was sometimes not what everyone wanted but once it was set it would not let itself be dragged off-track.

Haven't written MS that way for a while but it starts to feel like it is time for it again.

This is capitalism we’re talking about.

What sort of person is buying something for $35 over 6 week instalments? What sort of stuff are they buying? It's a cash grab on the poor until they get regulated.

Why does anyone need a payment plan for a $35 item though?

Because it hides the true price of things. It makes it easier to consume blindly with no regard to the actual cost.

It also allows them to more deeply tie your buying habits to your browsing history and to monitor you to figure out how to manipulate you towards spending more towards their owned and affiliated interests, while also making interest on your purchases. Diabolical.

Because they promote it as a $9 purchase, less than the price of 2 cups of coffee!!!

And most people are far too financially illiterate to understand what that means.

An APR of 23% for $50 sounds like I will have to pay $12.

A $4 flat fee is so much CHEAPER!

Nevermind that a credit card means I can pay back in 3 weeks minimum in the US, without paying any interest, and further, a $4 flat fee on $50 over 6 weeks is an APR that's over 60-70%, if not a lot more.

You've never gone to the grocery store with $10 for a week of food for you and a child.

A whole lot of people are living day-to-day- lying to the IRS about their number of dependents, just trying to make it through today.

The basic daily needs lead to some poor long-term decisions. The people pushing this 'pay later' scheme are scum.

>lying to the IRS about their number of dependents

Can you elaborate? Are you talking about fraudulently claiming a larger EITC by someone who is in fact working?

I believe the incremental EITC for an additional dependent is $40/week or more.

Most people in the US live paycheck to paycheck. High-interest, short-term loans on small principals to the working class have been around for a long time.

As crazy as it seems, in Brazil, payment plans are accepted everywhere. You can literally buy gas , groceries, medicines or whatever on your credit card and they will split make those installments for you. Maybe this market exist outside of the US?

Well, any time you buy with a credit card, you’re effectively doing the same thing.

I remember when they were rolling out credit cards in the US as a common payment method (late 90s)[1], and so for the first time you could put your McDonald’s meal on a credit card, comedians were joking that it felt like you were saying you couldn’t afford it all at once.

Which is not too far off from the reaction here.

[1] and to clarify, yes credit cards were a thing long before that but they were mainly accepted at department stores and for big ticket purchases, not fast food.

Colombia too. It was weird as hell when Starbucks kept asking me how many installment I want to pay for MY CUP OF COFFEE in.

How do late fees work on this product in Brazil? Does this enable usury rates when late fees occur?

https://www.profgalloway.com/red-friday/

The whole purchase amount plus interest is taken from the credit card limit and every month you are charged for those installments.

If you don't pay in full your statement, you pay regular Brazilian credit card interest rates (i.e. very high) on top of the BNPL interest rates.

Some stores that have high cash flow may opt to not explicitly charge interest, opting to discount the price if you pay in full or charging the same price no matter whether paying in full or in 12 installments.

It's important to note that the Brazilian BNPL scheme is enabled by the credit card acquirers, so there's a high degree of integration.

People put $35 items on their credit cards all the time, and don't always pay off their balance monthly.

Honestly, I do. I'm that broke. For instance, there are a couple of subscriptions I would take out that are on great sales for Black Friday, but only on their Yearly Payment options, which I can't afford in one lump sum, so I have to continue paying the monthly fees.

It's a months income for a huge number of poor people.

They're offering payment plans on Dominos pizza now...

Damn, even the Payday Loan and Rent-to-Own guys are taking notes.

It is interesting to compare to using a credit card.

The net tells me that the average credit card in the US has an APR of around 16%. Credit cards typically charge no interest for a month if you pay your balance in full that month. If you don't pay in full they charge interest based on your average daily balance during the month and the length of the month.

If you were to pay with your credit card and then make 4 payments toward your credit card balance on the same schedule that you would have made Zip payments, I get that Zip beats the card if the purchase is over $487 and occurs at the start of your credit card billing cycle. It the purchase occurs in the middle of the cycle it needs to be over $811 for Zip to be cheaper. (This is assuming that in the month of the 4th payment you pay of the card balance completely).

I would applaud the convenience, but the terms are not nearly as useful as other services. If I can spread a purchase over four months, that's really useful. Affirm has been good to me this year. ...But what is even the point when you bill twice as often as most people get paychecks?

> what is even the point when you bill twice as often as most people get paychecks?

I'm seeing some employers here offering "next day pay" i.e. you get paid today for the hours you worked yesterday. IDK but could also imagine that many "gig" jobs work that way, i.e. do Uber drivers get their pay immediately with each ride provided, or two weeks later?

Wonder if that model will soon be more common?

So on further thought, four payments over six weeks, assuming an immediate initial payment, means it bills every two weeks, or every standard paycheck. So I guess it's mostly fine...

But Affirm still defaults to spreading over four months, usually interest free for the retailers they partner with, and ends up a far superior deal.

Unfortunately some employers are charging 1% or more to get paid faster. It doesn't sound like much, but 1% to get money a week earlier is a very high APR.

The interest on $35 is only $4 since it is a flat rate not a reoccurring rate.

Right. It's a fixed term loan. Not revolving credit. These 2 loans are mathematically equivalent:

$35 at 0% APR, $4 fees, 6 weeks fixed term

$35 at 123% APR, $0 fees, 6 weeks fixed term

You could argue the high APR loan is worse because interest will be compounding if you miss your payments. But I'm guessing the Zip loan also has late payment fees.

But people are probably going to use it for larger amounts where that flat fee would equal a much lower apr.

An APR much lower than 123% is still outrageously high for purchases of $100 or $200 - but in any case, the browser should not get involved in this at all.

Sure, and generally the shorter the term the larger the APR. Makes it sound a lot scarier, huh?

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