I have really enjoyed reading this debate/discussion last night and this morning.
@monday85 I really thought you were going somewhere different when you said, "not all debt is equal". You're viewing debt from the lenders point of view, secured vs unsecured whereas
@uninformed82 is looking from the consumer point of view. To the consumer being in debt is being in debt, doesn't matter whether it's secured or not. If the consumer has debt collectors chasing them that's all they are concerned with not the security of the loan. The lender on the other hand is concerned with risk and insurance against risk.
You have both formed your point of view based on experiences. Both are true and accurate from your point of view.
If we put aside the ethics of lending and view BNPL as a product it gives us another way of looking at the cause of the rapid adoption.
Look at the mobile phone, the rapid adoption of the mobile phone really happened when the first IPhone came into existence. Now a phone is an essential tool in everyday life, but we're not all using iPhone. The reason for the adoption was because friction was removed and the experience became likeable. The qwerty keyboard was annoying, the screen was boring, the operating system was confusing and clunky. The experience was terrible.
People used to have to build computers with soldering irons and software was installed by flashing an image onto memory modules. This was before computers became household items. Then the friction was removed, computers came pre-built and loaded with software that has a graphical user interface. Now computers are everywhere.
The car is another example of change in which friction has been removed to make the experience better in some way.
There are millions of examples like those stated above where a change or inflection point has occurred because friction has been removed. Friction could come in the form of how long something takes or how much something costs. Time and money right?
Consider the BNPL product. The product allows the customer to buy something now but only pay a fraction of the full price and pay the remainder over time at a set schedule. In general, there's no cost to the customer unless they miss a payment. The sign up process is simple and using it is easy. It's not a piece of plastic, it's an app on the device that everyone lives on. BNPL "fits" into the lifestyle of the lead demographic; millennials. The friction of borrowing money has been removed for the millennial demographic.
The debt discussion is really just a distraction when you think about it. What is debt? The definition of debt is "something owed". If you use money that isn't yours to pay for something on the premise that you will pay it back then that constitutes something owed and therefore you have a debt. It's a simple concept and something that has been around for longer than any of us. There's an appetite for people to access money that isn't there's and we see this through mortgages, vehicle loans, business loans, credit cards, payday loans and BNPL. The reason why people want to access the funds is not really important. The only thing that matters is that they agree to pay it back at a set schedule. The form in which they access those funds will come in whatever product fits the customers demographic.
Reflecting on the myIOU launch this week we say JinnyBoy (I think that's his name). He's influential to millennials in SEA and was a great choice to get the attention of the target demographic. BNPL is manageable debt packaged in a modern way, it's not a trick to trap people, it's providing a service to fit a need that is going to be there with or without it.
This is my own opinion and no disrespect to anyone or their point of view.
