Thanks Claudia! I love comments! I thought I mentioned the cards toward the end, but pointed out that these are not really in the purchase journey and only get interchange not an MDR. So they improve engagement, but don't have the same advantages that the online versions have.
Great write up Andy! One thing to note is that Affirm, Klarna, and AfterPay have issued physical cards (with Affirm being particularly successful) both to unlock more brick and mortar spend (access within digital wallet is a tricky flow and ApplePay is opening to other providers) and to capture debit spend. Affirm and Klarna have also tried to provide a checkout experience with Pay Now included, Klarna recently abandoning those efforts in the US in order to lock in more distribution partnerships.
Interesting as always Andy. The distinction I would focus on is between purchase and payment. The purchase decision is the crystallization event that allows the lending to happen but purchase normally coincides with a payment event which is why people confuse these fintechs with payments. In these cases the payment event is actually a credit extension which does allow the merchant to get paid but involves a completely different set of risks and economics than other types of payment types. I'm also a fan but the stacked credit phenomenon of POS credit on top of regular card credit suggests that the consumer discipline point is mostly a figment of the BNPL industry's imagination and that there will be a reckoning.
Thanks Claudia! I love comments! I thought I mentioned the cards toward the end, but pointed out that these are not really in the purchase journey and only get interchange not an MDR. So they improve engagement, but don't have the same advantages that the online versions have.
Really well put Alan! Thank you for the clarity.
Great write up Andy! One thing to note is that Affirm, Klarna, and AfterPay have issued physical cards (with Affirm being particularly successful) both to unlock more brick and mortar spend (access within digital wallet is a tricky flow and ApplePay is opening to other providers) and to capture debit spend. Affirm and Klarna have also tried to provide a checkout experience with Pay Now included, Klarna recently abandoning those efforts in the US in order to lock in more distribution partnerships.
Interesting as always Andy. The distinction I would focus on is between purchase and payment. The purchase decision is the crystallization event that allows the lending to happen but purchase normally coincides with a payment event which is why people confuse these fintechs with payments. In these cases the payment event is actually a credit extension which does allow the merchant to get paid but involves a completely different set of risks and economics than other types of payment types. I'm also a fan but the stacked credit phenomenon of POS credit on top of regular card credit suggests that the consumer discipline point is mostly a figment of the BNPL industry's imagination and that there will be a reckoning.