Buy Now Pay Later (BNPL) Stocks - which one and why?

[Craton]

That's the reason I am not keen on those type of stock, still dip in 1k on ZIP to test the water. Lots of ple esp the young ones to get fast money to have things NOW n why worry about the small monthly fee, they never think it will add up.

One thing the young ones probably pay scant regard to is their credit score because BNPL has an effect on that too.

 

[Rabbithop]

what can I say...I am glad that we did a lot of overseas holidays n cruising too. It's an experience that we have no regrets before Covid. Not sure we want to travel far away for another 5 to 8yrs.
Rewarding myself with a small Honda car to run around on retirement, 11yrs later still loyal to me.
Currently motto is to help/support others that are in the pit with D or losing partner. Such is life, Live sensibly and with no regrets.

 

[Rabbithop]

One thing the young ones probably pay scant regard to is their credit score because BNPL has an effect on that too.

Well pointed out...but the young one, don't care. Maybe I should said, majority are not at that stage of life that needs to borrow huge sum to buy a house so cr rating would be water off duck's back.

 

[divs4ever]

bizarrely in 1975 my credit rating was terrible , because i had never borrowed before ( so had no record of debt repayment )

i bet my credit rating is still terrible after that loan @ 17.5% , i never borrowed again ( or even applied for credit cards or a margin loan )

and just to make you cringe further between 2011 and 2016 i had a great time investing in corporate debt ( despite MY appalling credit rating )

to me the credit game is simply unbelievable ( but popular with the masses )

 

[wayneL]

bizarrely in 1975 my credit rating was terrible , because i had never borrowed before ( so had no record of debt repayment )

i bet my credit rating is still terrible after that loan @ 17.5% , i never borrowed again ( or even applied for credit cards or a margin loan )

and just to make you cringe further between 2011 and 2016 i had a great time investing in corporate debt ( despite MY appalling credit rating )

to me the credit game is simply unbelievable ( but popular with the masses )

It's actually pretty nice to not give a @#£& about your credit score.

I have no idea what mine even is or ever was, it been 34 years since I've ever had any form of credit (apart from business accounts, which I avoid as much as possible too).

 

[Rabbithop]

What a turn around on market, uphill climb at the last hour. Check out ZIP...at the time of posting up 9.10%.

 

[Greynomad99]

The government is releasing its proposal for regulation of BNPL's today. If it places them under the requirements of the existing consumer lending laws much of their business is toast! That said our LNP leaders have never been strong on regulating business so it may just be another limp-wristed slap. Not a good day to be holding BNPL I suspect.

 

[frugal.rock]

The government is releasing its proposal for regulation of BNPL's today.

Thanks for letting us know, that's some pretty big news...

I guess this is when Z1P might outshine Alfyerpay?
Zip customers are credit checked during the onboard process, Alfyerpay doesn't credit check...
Don't know about the others.
I remember that Z1P was fully aware of impending legislation and participated in the code of practice process.
They should be fully aware of what will be in the proposal and my understanding is, they have been trying to operate within future expected legislations, to some extent.

@peter2 posted a list of BNPL stocks which included Tyro.
Would like to point out that Tyro is not a BNPL company.
It is a payments, terminals and merchant lending company.

The official blurb...

About Tyro - Tyro is a technology-focused and values-driven Group providing Australian businesses with payment solutions and value-adding
business banking products. The Group provides simple, flexible and reliable payment solutions as a merchant acquirer, along with
complementary business banking products.
For the more than 58,000 Australian merchants who chose to partner with Tyro at 30 June 2021, the Group processed more than $25.5 billion in transaction value in FY21.
In FY21 the Group generated $119.4 million in gross profit, originated $25.8 million in loans and held merchant deposits totalling $75.5 million.
Tyro is Australia’s fifth largest merchant acquiring bank by number of terminals in the market, behind the four major banks. The business was
founded in 2003 with a goal of being the most efficient acquirer of electronic payments in Australia. Tyro has a track record of innovation, creating
purpose-built solutions and being first to market.
This approach saw the company become the first technology company to receive an Australian specialist credit card institution licence in 2005.
In 2015 that licence was replaced by the award of an Australian banking licence, making Tyro the
first new domestic banking licensee in over a decade.
Payments are at the core of Tyro’s business, using its proprietary core technology platform to enable credit and debit card acquiring.
This offering is enhanced by features purpose-designed for those merchants who choose to partner with the Group, including Point of Sale systems integrations, least-cost routing (Tap & Save) and alternative payment types such as integrated Alipay.
While traditionally focused on in-store payments, Tyro has
recently expanded into eCommerce.
Further, Tyro provides value-adding solutions to its partners, such as loans in the form of merchant cash advances and fee-free, interest-bearing merchant transaction accounts.
Tyro has a team of more than 500 people, approximately half of whom are in technology roles.

 

[Dona Ferentes]

Washington-based US regulator the Consumer Financial Protection Bureau (CFPB) issued a series of orders to five US players including Zip Co, Affirm, Afterpay, Klarna, PayPal.

“The CFPB is concerned about accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology,” the regulator said in its statement..

and most aspirants are tanking

Afterpay has put out a statement suggesting it believes the review by the US Consumer Financial Protection Bureau is a positive for the industry.

“Afterpay welcomes efforts to ensure that there are appropriate regulatory protections for consumers in the diverse BNPL industry, and that providers are meeting high standards and delivering positive consumer outcomes while protecting their data.”

“Afterpay provides consumers with better transparency, lower costs, and better budgeting tools than traditional forms of credit and promotes responsible spending.”

In a statement on Thursday in the US, CFPB Director Rohit Chopra said: “We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”

The CFPB said it had three general concerns around consumers accumulating debt, regulatory arbitrage and data harvesting.

“Some BNPL companies may not be adequately evaluating what consumer protection laws apply to their products. For example, some BNPL products do not provide certain disclosures, which could be required by some laws,” the CFPB’s statement said.

“And while the BNPL application may look similar to a standard checkout with a credit card, protections that apply to credit cards may not apply to BNPL products.

“Many BNPL companies do not provide dispute resolution protections available to users of other forms of credit, like credit cards. And finally, depending on what rules the lender is following, different late fees and policies apply.”

 

[Dona Ferentes]

Buy now, pay later groups finance their loans to consumers by borrowing at benchmark floating rates like the London interbank offer rate (LIBOR) or bank bill swap rate (BBSW) plus a variable fixed margin, related to the assessed credit quality of the underlying loans and businesses. As floating borrowing rates rise in line with cash rates, so does the cost for the buy now, pay later players to fund their enormous loan books.

Shares in subprime lenders Zebit and Laybuy are down 95 per cent and 91 per cent from their respective IPOs. ZipCo and Sezzle are down 77 per cent and 83 per cent over the past year and fell 5.3 per cent and 7.3 per cent respectively on Monday to fresh 52-week lows. On an FX-adjusted basis Block’s current value means its takeover bid for Afterpay would only be worth $56.74 a share today, versus the $160 a share investors sent Afterpay to at the top of the buy now, pay later bubble this time last year.


La-Z-Buy?

 

[mullokintyre]

THE BNPL market darlings may well be in for a bit of rude shock.
This morning when I checked my banking trans, there was a notice from NAB that they will very soon offer the BNPL service themselves.
Can't imagine the other banks will not join in the party.
Apple has already announced that the BNPL facility will be included in the next release of the Apple IOS as part of the apple pay app.
No barriers to others entering the market should always be a bit of a warning.
Mick

 

[KevinBB]

Which one?
- none of them

Why?
- too risky

KH

 

[divs4ever]

Which one?
- none of them

Why?
- too risky

KH

i avoided them all , i couldn't see how they would make regular profits , i expect in time for increased regulation

i DO hold CCP which i think will get some increased opportunities , eventually buying up the overdue debt books ( that the BNPLs are having difficulty collecting from .. as there will be as inflation bites )

that does not mean they are all duds and maybe some will be bought by someone else ( like Afterpay was ) but i chose to avoid

since now NAB has decided to play in the space , i think others will follow , SOME might 'buy customers ' by snapping up distressed BNPLs

plenty of risk , but is there some reward for the correct picks

 

[Austwide]

I don't think any of the BNPL's have ever made a profit and even less likely now with with inflation reducing customers ability to pay (later).

Without real credit checks or repayment enforcement they're doomed.

I can't see NAB operating like that.

I think properly done BNPL and straight EFT have the ability to kill the CC as it stands.

 

[sptrawler]

If this article is correct, it sounds as though the buy now pay later bubble is bursting, I didn't get onboard because I thought it was a too good to be true story. Missed out on a hell of a profit though.
As the economy tightens up, I wonder if the peer to peer lending will be the next cab off the rank.

Buy now, pay later on the brink: ‘The entire market is collapsing’

The buy now, pay later sector’s rising bad debts and losses have become more apparent after pandemic stimulus payments from the government ended last year, and investors are worried.

www.smh.com.au

If the crunch of cabbage in their KFC burgers was not enough to alert consumers to the tough times ahead, the Reserve Bank shocking the market with its biggest rate rise in 22 years probably did the trick.
And no sector will be watching the consumer crunch more closely than the buy now, pay later (BNPL) operators. The BNPL outfits have little room to manoeuvre as they try to convince the market that they have a future as a viable stand-alone business and won’t be killed off by a feature on your Apple or Commonwealth Bank app.

 

[The Triangle]

If this article is correct, it sounds as though the buy now pay later bubble is bursting, I didn't get onboard because I thought it was a too good to be true story. Missed out on a hell of a profit though.
As the economy tightens up, I wonder if the peer to peer lending will be the next cab off the rank.

Buy now, pay later on the brink: ‘The entire market is collapsing’

The buy now, pay later sector’s rising bad debts and losses have become more apparent after pandemic stimulus payments from the government ended last year, and investors are worried.

www.smh.com.au

If the crunch of cabbage in their KFC burgers was not enough to alert consumers to the tough times ahead, the Reserve Bank shocking the market with its biggest rate rise in 22 years probably did the trick.
And no sector will be watching the consumer crunch more closely than the buy now, pay later (BNPL) operators. The BNPL outfits have little room to manoeuvre as they try to convince the market that they have a future as a viable stand-alone business and won’t be killed off by a feature on your Apple or Commonwealth Bank app.

And how will the labor government treat the BNPL sector which has largely escaped any regulation or scrutiny from the Liberal* governments? Crushing BNPL with regulation is not going to lose labor any votes and it will make them look 'tough' on dealing with corporations (without actually touching any corporation that matters).

*Note that the former chairman of HUM is often described as a liberal party power broker in the media.

Coalition of consumer groups calls for the next Parliament to regulate BNPL | CHOICE

CHOICE joins more than 100 organisations calling for a commitment to reining in the unregulated buy now, pay later sector.

www.choice.com.au

 

[Dona Ferentes]

some action, some traction

US player Sezzle surged 37.6 per cent on news it turned profitable for the final two months of 2022.

Afterpay-owner Block surged 6.1 per cent; shares in Block have gained 17.4 per cent since 01 January after tumbling 61% over a horror 2022 for the BNPL and tech sectors on rising interest rates that prompted investors to dump loss-making businesses.

An analyst said, “[Block over] the last three quarters has a good track record of beating expectations, and quite big beats. The Cash App [product] is the beast in that [Block] business. They don’t split out the Afterpay numbers anymore, I think it’s a bit of sentiment improving for the share price.”

Shares in bombed-out buy now, pay later group Zip Co finished 22.8 per cent higher ahead of an anticipated trading update this week when it is expected to update investors on its drive to slash costs in a bid to turn profitable....

 

[waterbottle]

BNPL in the US, an earnings miss...

Affirm Cuts 500 Employees, 19% of Its Workforce

The buy now, pay later company expects as much as $39 million in restructuring costs.

www.wsj.com

 

[Dona Ferentes]

07 Feb, 2023

Openpay (ASX: OPY) goes under. The company has shed more than half its staff and receivers will sell off assets, including its technology platform, to return whatever they can to secured creditors, as doubts grow about the viability of the buy now, pay later industry.

It is understood that 80 of Openpay’s 140 staff have been made redundant, with the remainder kept on board to keep collecting customer payments, and to service the business-to-business unit that connects trade sellers.

...I wonder if customers have any wiggle room to duck their 'obligations'?

 

[waterbottle]

BNPL in the US, an earnings miss...

Affirm Cuts 500 Employees, 19% of Its Workforce

The buy now, pay later company expects as much as $39 million in restructuring costs.

www.wsj.com

Just to add to this, AFRM's CEO stated the following:

“Growing rapidly over the last few years, and especially through the pandemic, we consciously hired ahead of the revenue required to support the size of the team,” Levchin said, but rising rates have dampened consumer spending levels and upped Affirm’s cost of borrowing.


Affirm had 2,552 employees as of June 30, 2022, according to its latest 10-K filing.


“It is an economic reality that we have to live within our means and match growth of headcount with growth in revenue, but just for the record, what we’ve done is we’ve rolled back six months of engineering hiring,” Levchin said on Affirm’s earnings call, according to a transcript provided by AlphaSense/Sentieo.

Today, it’s a little bit tougher to justify having things that will create the next $1 billion business three years from now built today,” he added on the earnings call. “We’ll have to build it a year from now.”

A sign of the times for BNPL.