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Buy now pay later is having a moment

September 7, 2021, 7:21 PM UTC

Some 14 months ago, I bought a rowing machine. 

It was the quintessential pandemic purchase: Gyms were closed, I hate running, and the resale market for weights was and still is ridiculously frothy. In college, my tall (I’m 6’4”) and formerly lanky self was told I’d be a good rower. So, I set off to convince my wife about purchasing a $1,400 rowing machine. 

Finally, after weeks of hemming and hawing, we decided, ‘Let’s do it.’ During the online checkout process, when I reached the payments section, I saw an option to split the cost up into bite-sized and interest-free chunks through a company named Affirm. Enticing, right? Well, many consumers have thought so during the pandemic—leading to a rush of interest and optimism in services like Affirm, Klarna, and Afterpay that offer buy now, pay later, or BNPL.  

Since the start of 2020, Affirm has seen its active consumers climb 125% to 5.4 million. The Max Levchin-led company recently announced a partnership with e-commerce goliath Amazon, helping push Affirm’s shares up more than 37% in the ensuing days. In June, Sweden-based Klarna was valued at $45.6 billion in a private funding round. And, in August, Jack Dorsey’s Square agreed to pay $29 billion to acquire Australian BNPL company Afterpay. With the help of Goldman Sachs, Apple has even been said to be looking to incorporate BNPL into Apple Pay. 

The general concept behind BNPL—that is, to buy that big screen TV in a series of smaller payments—is far from new. Just look at credit cards or layaway offered by department stores. Even early e-commerce movers seemed to recognize the opportunity of a buy-now-pay-later-like offering for the digital era a decade ago. In 2008, eBay bought a company called Bill Me Later for almost $1 billion (Its current owner, PayPal, has since rebranded the service as PayPal Credit). 

What sets Affirm, Klarna, and the like apart is the ability for consumers to generally buy products interest free (unlike with a credit card) and right away (unlike on a layaway plan). Of course, it’s not an entirely risk-free endeavor for consumers. BNPL is still a line of credit that could influence credit scores and trigger debt collectors in certain cases, as some consumers are now finding out. “I do see it as a double-edged sword,” Sheridan Trent, a research analyst with The Strawhecker Group, told me. But it’s not going away. BNPL accounted for 2.1% of global e-commerce in 2020, according a report from FIS-owned Worldpay, which said it could account for double that amount by 2024. 

As for our rower, my wife and I opted to pay the full amount upfront—and probably would again. We had the money, and the idea of being responsible for future payments wasn’t appealing. Now, would we buy the rower again? That’s an entirely different question.

Declan Harty
@declanharty
declan.harty@fortune.com

NEWSWORTHY

New iPhones and Apple watches are near. On Sept. 14, Apple will host its a product event. Details remain sparse on what will be announced, but the Tim Cook-led giant is expected to reveal the iPhone 13 and a new Apple Watch. The new phone will likely come in the same size as its most recent edition, but, as The Verge points out, it's expected to have better screens and cameras. Apple's latest smartwatch, meanwhile, is expected to have a new design that will include a larger screen and flatter edges. 

A crypto bloodbath. On Tuesday, the cryptocurrency market suffered a brutal decline. Bitcoin fell as much as 17%, and in total, the market by midday had shrunk by more than 10% from the prior day, according to CoinMarketCap. What prompted the sell-off is still unknown, but it hit the same day that El Salvador began accepting Bitcoin as legal tender—making it the first country to do so. President Nayib Bukele was undeterred, though. The El Salvador leader tweeted that the country had bought 150 more Bitcoin in the middle of the drop. 

Succession planning kicks off at JD.com. Founder and CEO Richard Liu is taking a step back from leading the day-to-day business of Chinese e-commerce goliath JD.com in a move that could signal a transition in the company's top ranks, according to The Wall Street Journal. In the face of China's mounting regulatory crackdown on tech, JD.com's head of retail, Xu Lei, has been promoted to president, and will take over the management of JD.com's daily operations. 

Tripwire ousts CEO over Texas abortion law comments. Videogame developer Tripwire Interactive has shaken up its C-suite following a tweet over the weekend from now-former CEO John Gibson voicing support for a new abortion law in Texas that largely banned the procedure within the state. The company said Gibson's comments "disregarded the values of our whole team, our partners and much of our broader community." It has since named vice president Alan Wilson as interim CEO. 

Deutsche Telekom ups its stake in T-Mobile. In a $7 billion share-swap deal with SoftBank GroupDeutsche Telekom has increased its position in T-Mobile U.S. to 48.4%. SoftBank is expected to receive cash as part of the deal, as well as a 4.5% stake in Deutsche Telekom that it will not sell before the end of 2024, Reuters reported Tuesday. 

FOOD FOR THOUGHT

What's up at WhatsApp. A ProPublica investigation has found that Facebook's WhatsApp—long heralded for its focus on protecting users' conversations by using end-to-end encryption—is not as private as believed, though some have disputed the seriousness of the privacy implications. The messaging app, according to the report, relies on a team of at least 1,000 content-reviewing contractors based in Texas, Ireland, and Singapore, who scan upwards of 600 pieces of flagged WhatsApp content every day for any signs of child porn, terrorist planning, fraud or other causes for concern. But that's only one way in which the Facebook unit compromises WhatsApp users' privacy, ProPublica reported. 

From the article:

Like other social media and communications platforms, WhatsApp is caught between users who expect privacy and law enforcement entities that effectively demand the opposite: that WhatsApp turn over information that will help combat crime and online abuse. WhatsApp has responded to this dilemma by asserting that it’s no dilemma at all. “I think we absolutely can have security and safety for people through end-to-end encryption and work with law enforcement to solve crimes,” said Will Cathcart, whose title is Head of WhatsApp, in a YouTube interview with an Australian think tank in July.

The tension between privacy and disseminating information to law enforcement is exacerbated by a second pressure: Facebook’s need to make money from WhatsApp. Since paying $22 billion to buy WhatsApp in 2014, Facebook has been trying to figure out how to generate profits from a service that doesn’t charge its users a penny.

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BEFORE YOU GO

Smart toilets. It was only a matter of time, right? 

An effort to build the next era of toilets is underway. Researchers are working to build toilets that can analyze a person's blood pressure, their diet, and any chronic conditions like irritable bowel syndrome that they may have, according to The Wall Street Journal. To do so, the smart-toilet-maker-hopefuls are using everything from machine learning to camera-equipped toilet bowls. "All of the things that have come with smartwatches and phones, you can imagine that on another scale," Joshua Coon, a University of Wisconsin-Madison bioanalytical chemist, told The Journal.  

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