Rise of ‘buy now, pay later’ creates a blind spot

THERE’S a glaring contradiction in the “buy now, pay later” (BNPL) business.

Companies are building empires on serving the unbanked and underbanked populations, which have long been starved of credit. By providing often interest-free instalment plans to those too young or disenfranchised to have a credit history, these companies argue they are helping users manage their cash flow and make higher-value purchases they could only dream of before.

Credit data is important for those trying to build enough of a credit history to move from alternative sources of financing – often used by the underbanked – to the more traditional (and typically cheaper) sources.