It also allows them to more deeply tie your buying habits to your browsing history and to monitor you to figure out how to manipulate you towards spending more towards their owned and affiliated interests, while also making interest on your purchases. Diabolical.
Because they promote it as a $9 purchase, less than the price of 2 cups of coffee!!!
And most people are far too financially illiterate to understand what that means.
An APR of 23% for $50 sounds like I will have to pay $12.
A $4 flat fee is so much CHEAPER!
Nevermind that a credit card means I can pay back in 3 weeks minimum in the US, without paying any interest, and further, a $4 flat fee on $50 over 6 weeks is an APR that's over 60-70%, if not a lot more.
Most people in the US live paycheck to paycheck. High-interest, short-term loans on small principals to the working class have been around for a long time.
As crazy as it seems, in Brazil, payment plans are accepted everywhere. You can literally buy gas , groceries, medicines or whatever on your credit card and they will split make those installments for you. Maybe this market exist outside of the US?
Well, any time you buy with a credit card, you’re effectively doing the same thing.
I remember when they were rolling out credit cards in the US as a common payment method (late 90s)[1], and so for the first time you could put your McDonald’s meal on a credit card, comedians were joking that it felt like you were saying you couldn’t afford it all at once.
Which is not too far off from the reaction here.
[1] and to clarify, yes credit cards were a thing long before that but they were mainly accepted at department stores and for big ticket purchases, not fast food.
The whole purchase amount plus interest is taken from the credit card limit and every month you are charged for those installments.
If you don't pay in full your statement, you pay regular Brazilian credit card interest rates (i.e. very high) on top of the BNPL interest rates.
Some stores that have high cash flow may opt to not explicitly charge interest, opting to discount the price if you pay in full or charging the same price no matter whether paying in full or in 12 installments.
It's important to note that the Brazilian BNPL scheme is enabled by the credit card acquirers, so there's a high degree of integration.
Honestly, I do. I'm that broke. For instance, there are a couple of subscriptions I would take out that are on great sales for Black Friday, but only on their Yearly Payment options, which I can't afford in one lump sum, so I have to continue paying the monthly fees.