[aaaaaaabbbbbb]

Assuming one has access to a credit card and is financially literate, I agree that using BNPL is a hard sell (never having used it myself). But there is a large population--the unbanked--that lacks access to credit cards. For that population, the choice is not between credit card and BNPL, but BNPL and cash.

I found the article's description of how BNPL structurally differs from credit cards interesting, as it is a reasonable explanation for how BNPL can serve the unbanked and still have functioning credit risk models:

> Even with adverse selection for BNPL, the underwriting is for each transaction, not for all monthly spending like that in credit cards; so if a consumer misses a payment, the BNPL provider can stop lending immediately, as opposed to the credit card company which has to underwrite the person’s full ability and willingness to repay their debts. This tech-enabled granularity allows for legibility and hence greater precision and predictability.

[margalabargala]

> But there is a large population--the unbanked--that lacks access to credit cards. For that population, the choice is not between credit card and BNPL, but BNPL and cash.

Which is an indication that the status quo will not last.

The median person who cannot get a bank account and a credit card, is in that state due to a history of either fraud or nonpayment.

Sooner or later, that preponderance of risk will catch up to BNPL and it will either become less accessible, like credit cards, or it will become more like services that already service that population segment, like check cashing locations and payday loans.

Them having better technology and granularity like you say won't save them. At best it can delay the inevitable.

[ivanbalepin]

Yes, that's a good point. However, how much of this finer-grain lending flexibility translates into more favorable underwriting (to help cover the unbanked) is not clear. The author did not mention any data to that effect.

[immibis]

How does a person without a bank account repay their Klarna debt?

[ivanbalepin]

probably meant "underbanked" - has an account but credit shot so no cc's