Ann: Completion of Security Purchase Plan, page-45

Hi @nakervirus. To answer your last question, respectfully, yes I think you have. BNPL customers are not loyal to any one provider, various consumer surveys have demonstrated this. There is so much competition (for now…) that customers don’t pay and can move onto another provider. The reason I think the SZL numbers are significant is because a) across a 24 month period the bad debts have ballooned verses income growth and b) Zip are wanting to buy this model and amalgamate it into their own, which has similar issues. If I recall correctly Zip used to report bad debts as a percentage of income, but they recently changed to reporting them as a percentage of TTV…. ever wonder why?

To my mind, it’s really simple economics - if you’re a quasi-lender, and for every $1 of your income you have to write off 50c as provision for bad debts, the model will not work at any scale. But holders here will tell you they will magically dump the bad debt and pick up the good customers. Sezzle couldn’t manage that across two years, despite telling the market how tech-savvy they are. Meanwhile, BNPL players are currently advertising their products for fuel and grocery payments. Do you honestly think people who need to BNPL their weekly groceries are a good credit risk?

Having said that, I am somewhat biased against credit cards/BNPL in general because I think encouraging people to spend money they don’t have on non-essential shopping is not helping their financial well-being. But putting aside my views on the sector, the simple economics don’t stack up.