What's the value proposition of a zero interest/no fee buy now pay later scheme? Is it just reaming folks who miss a payment? A loss leader getting more users into the Wallet ecosystem?
It seems like many of them act like credit cards and charge the merchant a percentage, since they “drive consumption” and encourage people to buy stuff. Of course, this fee will likely be added into the price that all consumers pay, so as these get bigger, we all will be subsidizing interest free loans to people in the form of 1%-3% higher prices. Much like credit cards are today.
The value proposition to me seems to be that they sold a bike at 3500$ they would not have sold otherwise and they can deal with the payment being made over time rather than all at purchase time.
For the user the value proposition is that value adding purchases like this can be made and paid off while they provide value.
I might have expressed this poorly, but it wasn’t an “investment in the future”. And that’s exactly what made it interesting. The monthly costs where lower immediately, since the cost of transport which was saved was higher than the monthly cost to pay for the bike. It was just a straight up cost reduction due to the structure of the payment. Had the zero interest monthly payments not been available then it would have been the more typical “investment/ROI over time” situation, and there might be an argument for it still being beneficiary to go into debt to make the purchase because over the long run it would pay of again. But the payment structure just makes everything a thousand times simpler.
It also allows the sellers to increase their prices or even simply upsell without pricing out their own consumer base.
The commercials for Apple Pay have me thinking the exact opposite.
* People with good credit don't need to manage their monthly credit payment. They simply pay it all off.
* People with good credit also don't really need to apply for an emergency credit card (unless they happen to forget their wallet).
My impression is many of these products are akin to loan sharks. They loose/break even on "good" borrowers, but make loads on people who are "so close" to being able to fully repay.