BNPL: Just another proof of traditional banks’ decadence
Square’s €29 billion acquisition of Afterpay earlier this month, gives Jack Dorsey’s company control over one of the best-known companies of the Buy Now, Pay Later (BNPL) phenomenon, putting the spotlight on a growing trend closely associated with millennial consumption patterns.
Afterpay is an Australian company that has so far provided more than 16 million users with the means to buy stuff from more than 100,000 establishments around the world, deferring payment via four interest-free installments. Together with other fintech companies such as Sweden’s Klarna (valued at $46 billion), the Dubai-based Tabby (some $300 billion after its last financing round) or the American Affirm, they are highly popular among younger people unwilling to pay the costs associated with credit cards. You use one of these applications at the moment of payment, fragmenting your purchase and either paying a quarter back every two weeks interest-free, or accruing interest by taking longer.
Generally, these platforms allow users to make relatively expensive purchases, paying their price in four installments over a six-week period, using an app that carries out the payment on the relevant store’s website. The user’s account is linked to a debit card or bank account, from which payments are automatically drawn. The app is responsible for reminding…
