Crapital One stops 'risky' buy-now-pay-later credit card transactions

[hegemony]

Crapital One stops 'risky' buy-now-pay-later credit card transactions

 

 

 

[cv91915]

By definition, every credit card transaction is buy-now-pay-later.

[insolent1]

Capital One should expand into Auto Title loans. They'd probably run those more efficiently than their CC portfolio.

[hdporter]

This is interesting because among vendors that C1 is presumably cutting off is Bose, who offers a purchase option in which your credit card is used to spread the purchase price over something like 6 or 12 installments, with no fees.

 

I'm inclined to suspect that the suspension isn't about consumer risk at all.  Instead, C1 simply doesn't like the prospect of competition from a charge vehicle that has taken a large foothold in other countries.

[IndyPoolPlayer]

9 hours ago, insolent1 said:

Capital One should expand into Auto Title loans. They'd probably run those more efficiently than their CC portfolio.

No. Auto Title loans are just above PDLs on the purgatory scale. I'd like to see them banned.

[Rogue]

16 hours ago, hdporter said:

This is interesting because among vendors that C1 is presumably cutting off is Bose, who offers a purchase option in which your credit card is used to spread the purchase price over something like 6 or 12 installments, with no fees.

 

I'm inclined to suspect that the suspension isn't about consumer risk at all.  Instead, C1 simply doesn't like the prospect of competition from a charge vehicle that has taken a large foothold in other countries.

BINGO!

 

The move makes CapOne the first major financial firm to push back against the quick-growing BNPL segment which has seen startups such as Australia’s Afterpay Ltd make inroads offering interest-free shopping with no credit history required.

 

Australian BNPL companies have seen their share prices soar in 2020 as COVID-19 lockdown measures and government economic stimulus payments for individuals spurred online shopping.

[Cactus Flower]

I wonder how this all is different than what T-Mobile (maybe other carriers) have been doing for a decade or more.

Installment payments to T-Mobile on my phone, come out of my credit card every month...

 

I use US Bank though because I get 5% back every month, not Cap1

 

I don't understand how this translates into no money made for the banks/credit cards..  if people aren't paying it off, they're getting the interest $ that way.  Other than it is much easier for the consumer to pay off $21 a month than $800 thrown on there all at once.

 

I only ever use Cap1 for foreign transactions and they are PIF before the statement even cuts...

so I am getting 1.5% back as well.

 

 

 

 

 

 

[cv91915]

There is an element of truth to the higher risk of these types of transactions over the long term.

 

Think about it.  You'll have consumers making minimum payments on minimum payments.

[insolent1]

PDL and auto title loans are right up Capital One's KS&A.

[hdporter]

14 hours ago, cv91915 said:

There is an element of truth to the higher risk of these types of transactions over the long term.

 

Think about it.  You'll have consumers making minimum payments on minimum payments.

 

No doubt.  But I'll suggest that a credit product that has a very narrow purchase field is much less risky than one that can be used all over the world. 

 

I suspect that the default rate on Bose accounts (which, at least in the past have permitted purchases that are passed through as installment charges to a major credit card) is considerably less than that for C1's own credit builder product.

 

* I see that Bose has replaced it's in-house BNPL with Klarna.

Edited Monday at 11:30 PM by hdporter