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 Hi Ketharaman,
Thanks for your comment. I welcome the debate and respectfully disagree. At least three of the big BNPL companies (Klarna, Affirm, AfterPay) made a loss in 2021 and I don’t think an MDR of 4-6% is sustainable in any case. Many of the business cases around BNPL services were created in a 0% or, at the very least, a low interest rate environment. Given how quickly interest rates and inflation are now rising in advanced economies, I am skeptical that business models that were built on these assumptions can survive without serious changes.

Moreover, high inflation is squeezing both consumers and merchants, and the very target audience for BNPL services are also more likely than other target groups to be hit hard by inflation and are therefore more likely to struggle to make repayment. Add in the lack of regulation (and indeed looming regulation as the example of the UK shows) and the trend of consumers having multiple open BNPL accounts adds complicating factors. While I do think BNPL has a place in the future marketplace, I don’t think it will achieve the dominance that some predict.