Episode 143 - The Buy Now Pay Later Challenge to Credit Issuers - Chris Bixby, Sezzle - Payments on Fire® Fintech Series

Continuing our payments in fintech series, we talk about one of the major changes in the payments industry over the last few years: the installment lending phenomenon. Companies like AfterPay, Klarna, and Affirm (that just IPO'd and saw its stock double in one day) are leaders in this buy now, pay later (BNPL) space and appeal to Millennial and Gen Z users as well as the merchants selling to them. These firms offer a range of installment payment options: three, six, and 12 month payback periods are typical. The interest rate gets lower the shorter the payback period and, for the shortest period, that cost is eliminated. The merchant pays for it as promotional financing. These installment loan options generally increase the size of the sale and, because the BNPL provider may take on the risk and guarantee the sale, they remove a measure of risk from the merchant. In other words, for multiple merchant categories, they increase sales. BNPL providers accept multiple methods of payment: credit and debit cards and, of course, they may encourage the use of ACH as a low cost funding source. For younger demographics, a majority of them without credit cards and credit histories, these services enable them to transact. Sezzle is a player in this arena with a unique, very short term product that charges no interest to the consumer because the purchase is paid back in six weeks. The costs are born by its merchant customers. Sezzle has particular appeal to sub-prime or young consumers who may not even have a credit score. Take a listen as Sezzle's Chris Bixby, VP of Growth, and Glenbrook's George Peabody dissect the Sezzle proposition and discuss the changing face of Retail in the post-COVID era. Watch Chris describe why his customers choose the Sezzle payment option: