The US CFPB gives some student tuition payments a failing mark for penalties and other harmful loan practices. Fitch Ratings says higher interest rates could hit some BNPL operators and consumers hard, although loan losses remain at 1%. High-income earners seem to really like BNPL and use it more than other consumers. Pay after delivery is proving popular in the EU and US.
Consumer advocates in Australia warn of negative impact after Drakes grocery chain launches BNPL. Meanwhile, Argos does an Ebenezer Scrooge in the UK and drops BNPL just in time for holiday shopping. FCA chief Nikhil Rathi since the number of financially strapped Britons hit 11% as consumers turn to payday loans and BNPL. Lipa Later raises $3.3 million to continue its African growth.
CFPB investigates tuition payment plans as students go back to school
The Consumer Financial Protection Bureau (CFPB) published a report on tuition payment plans, is collecting more information, and has warned about fee structures and, in some cases, inconsistent disclosures. The CFPB also reported that it “recently estimated, based on newly available data, that private sector lending for education by BNPL lenders increased by 1,028% between 2019 and 2021.” CFPB expressed concern about delinquent payments, penalties and other consequences of nonpayment. PYMNTS
How could rising interest rates impact BNPL users and companies?
Many of the biggest BNPL providers have strict lending standards, and safeguards remain in place. Rising interest rates on these loans could present a litmus test for BNPL providers, as higher borrowing costs could increase delinquencies and cause financially strapped customers to default on their payments. While loss rates have held steady at 1%, a Fitch Ratings report says higher rates could also make it more expensive for BNPL companies to finance their loans. Investopedia
High-income earners’ love of installment plans signals lucrative opportunity for merchants
As detailed in “Installment Plans Becoming a Key Part of Shopper’s Toolkit,” a PYMNTS and Splitit collaboration, 60% of shoppers used these installment plans to buy consumer products in the past year, with younger age groups exhibiting even higher usage rates. The study finds that high-income earners favor installment plans more than lower-income consumers, with 64% of consumers earning $100,000 or more annually using these plans, exceeding the shares of consumers in lower-income brackets. PYMNTS
Digitizing cash on delivery with the help of BNPL
After successful launches in Europe and Australia, Splitit CEO Nandan Sheth said the company was “thrilled” at the results, and consumers had shown strong demand for pay after delivery services. Because deliveries to some countries or cross-border take longer, the pay after delivery option was particularly valuable for cross-border merchant customers like AliExpress. Splitit pivoted its existing technology to provide the new feature, and the US rollout is a success. Fintech Nexus
Warning as Aussie supermarket chain introduces Afterpay
Independent chain Drakes, which operates in South Australia and Queensland, is the first supermarket Down Under to offer customers a buy now, pay later (BNPL) option after introducing Afterpay across its 65 stores. Shoppers can pay for items in four interest-free installments every fortnight, but it imposes late fees if payments are missed. The move has come under fire from welfare groups and consumer experts, who warn it could create a debt trap for vulnerable consumers in the long run. Yahoo Finance
Argos dumps BNPL option as shoppers now can’t afford Christmas gifts
It’s the latest blow for British shoppers during the cost of living crisis. Devastated Argos customers have our worrying about whether they can afford presents for their loved ones this festive season. The company previously offered a ‘buy now, pay later’ (BNPL) service, where payment plans could be created over three, six or 12 months. The Mirror
Cash-strapped Brits pushed towards payday loans and BNPL, FCA warns
FCA chief Nikhil Rathi warned that rising prices had tipped millions of customers into debt this year while scores of people were still unable to access financial products. Research by the watchdog found the number of adults in financial difficulty rose from 8% in May 2022 to 11% in January 2023, meaning 5.6 million people were plunged into financial trouble. The number of adults finding it a “heavy burden” to pay bills increased from 15% to 21% in the same period. City A.M.
Lipa Later raises $3.3 million in private debt to expand services and enhance customer experience
Lipa Later, a leading fintech platform in Africa, successfully raised $3.3 million in private debt from Rubicon Landing, a transaction advisory firm, and KN Law, a leading legal advisory firm. Established in 2018 by Eric Muli, Lipa Later offers a BNPL service to consumers, allowing them to purchase products and services on credit and pay for them in installments without needing a traditional credit card or loan. Clayton County Register