Daily Price Movement / General Discussion, page-40560

https://www.copyright link/markets/equity-markets/payments-veteran-warns-buy-now-pay-later-faces-more-pain-in-2022-20211208-p59fqy




Mr Halverson predicted 2022 could bring more poor performance as balance sheets and cash flows weaken. “They’re going to have to try to raise a lot of money,” he warned. “It partly depends on how quickly interest rates go up, because if they go up quickly there could be carnage. If there’s a slower uptick then obviously the carnage will be slower in my view.”

Mr Halverson also attacked the sector’s cavalier approach to bad debts and pointed to the fact that the charge card sector, including Amex and Diners Club, wore $15.4 million of bad debts on $56.8 billion of sales over the past 12 months, versus buy now, pay later at $220 million of bad debts on $11.4 billion of sales.

The bad debt problem could translate into lower credit ratings and higher funding costs for the interest-free lenders, according to the payments veteran.

To be successful in payments you have to have scale, and you must have what the industry calls ubiquity, which is wide acceptance – and buy now, pay later has neither,” he said.

The lack of a moat also means the marketing costs to acquire a customer may not equal their lifetime value as the product’s functionality has little to lock in a customer, unlike some software-as-a-service businesses, for example.

“Because they’re all frantically going at the US they’re racing to the bottom,” Mr Halverson said. “And that means probably more bad debts because they’ve gone after customers who haven’t got credit ratings



Arn't these the things that boomer Goodfella58 has been saying all along