Unraveling the Complex World of Buy Now Pay Later with Paul Kesserwani
Oct 19, 2023
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Paul Kesserwani, CEO of Cushion, discusses the evolution of Buy Now Pay Later (BNPL) industry, unconventional applications of BNPL, dispelling myths about BNPL, credit building and understanding credit scores, and challenges in consumer financial services.
Cushion simplifies bill payments and credit building in the buy now, pay later industry.
The buy now, pay later industry needs transparency, education, regulation, and financial rebundling for improvement.
Deep dives
Cushion's Product Offering: Simplifying Bill Payments and Buy Now, Pay Later
Cushion is a consumer bill pay company that helps users manage their bills and buy now, pay later finances. They simplify bill payments for consumers and offer features like organizing payments and building credit. They started by negotiating bank fees for consumers, but shifted their focus to the growing buy now, pay later space. Cushion provides a platform to organize and pay for buy now, pay later loans, and offers credit building features. They aim to address the need for transparency and education in the buy now, pay later industry.
Evolution and Features of Buy Now, Pay Later
Buy now, pay later started as a point-of-sale financing tool, allowing consumers to split payments over a few months with no interest or fees. Over time, it expanded to cover everyday expenses, services, and post-purchase financing. The industry became competitive, with various companies offering different merchant fees and interest rates. Consumers were stacking loans and facing difficulties in staying on top of their payments. Late fees were introduced, and companies started underwriting consumers rather than just purchases. Banks also entered the space, offering post-purchase financing. The industry evolved from a simple payment method to a financing option for anything, anywhere, and at any time.
Consumer Behavior and Insights in Buy Now, Pay Later
Consumers use buy now, pay later for a variety of reasons. Some turn to it out of necessity when facing unexpected expenses or maxed-out credit cards. Others are enticed by the flexibility and convenience of paying in installments, even for non-essential purchases. However, consumers often find themselves overwhelmed by multiple loans, struggling to manage payment schedules, and accruing late fees. Surprisingly, some consumers view late fees as a useful feature rather than a burden. Many users carry a balance and make consistent payments, while others experience sporadic payments or even charge-offs.
Challenges and Needed Improvements in Buy Now, Pay Later and Consumer Financial Services
The buy now, pay later industry and consumer financial services as a whole face several challenges and areas for improvement. Transparency and education are needed to help consumers understand the terms, fees, and impact of using buy now, pay later. Stronger regulation is necessary to ensure uniform and clear standards across providers. The credit-building aspect of buy now, pay later also requires attention to accurately reflect a consumer's creditworthiness. It is important to address consumer protection in areas such as fraud prevention, dispute resolution, and data privacy. Lastly, there is a need for financial rebundling, combining services into a unified platform to provide consumers with a seamless and comprehensive financial experience.
In this episode of Fintech Layer Cake, Paul Kesserwani (Cushion Founder & CEO) sits down with Reggie Young as they dive deep into the intricate dynamics of the Buy Now, Pay Later (BNPL) industry.
They explore its evolution, regulatory frameworks, consumer behavior, and the pivotal role of companies like Cushion in simplifying bill payments and credit building amidst the complexities of BNPL.
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