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Burrito Now, Pay Later

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Re: Burrito Now, Pay Later

#181

Post by kweingar »

benlivengood wrote: post #75
skybrian wrote: post #60

When the interest is paid out of a store’s marketing expenses, it’s pretty ambiguous who specifically pays it, but the money ultimately comes from the store’s revenue. If it results in higher prices, the people who actually use “buy now pay later” aren’t going to be the only ones paying more, since they pay the same price as everyone else. The costs are spread across all customers. Depending on demographics, this cou…

Credit in general is an incredibly regressive tax; only the poorest end up paying much interest and it's a much larger fraction of their total cash flow. I can get between 2% and 4% cash back on all purchases on a credit card that I pay off monthly with a zero-fee ACH transfer, paying no interest or yearly fees. I literally take poorer or less financially secure people's money that they spend on credit card interest.…

Highly recommend this podcast by patio11 explaining that poor people are not funding credit card rewards programs.

https://www.complexsystemspodcast.com/episodes/credit-card-r...

Re: Burrito Now, Pay Later

#182

Post by poincaredisk »

pseudo0 wrote: post #55
margalabargala wrote: post #53

Earlier quoted context omitted.

> > Is financing your lunch a sign of societal decay? Maybe, maybe not. > Financing your lunch means you can't pay for your lunch. And then somebody comes to search profit in that. Yep, it's societal decay. Counterargument: almost always when I buy something, lunch or otherwise, I put it on a credit card, which I pay off always before the due date but essentially never on the same day I had the lunch. Viewed through…

The credit card company still takes a 2-3% cut, which absolutely gets passed on to consumers. You get part of it back in the form of credit card rewards and services (eg. fraud protection, charge backs) but it's still a tax on everything. BNPL is worse, they take 5% and all you get is a small loan for a few weeks. Their whole business model relies on it being "free" for middle-class people who will pay back their loa…

>This is an area where government regulation is actually required, all transaction fees should be disclosed and charged as a surcharge on the base purchase price, whether it's a credit card or BNPL

Btw. in Europe the card thing was solved differently. First, most people use debit cards, not credit cards. Second, card fees are capped at 0.2% which makes it actually a cost saving measure (cash processing is not free).

Re: Burrito Now, Pay Later

#183

Post by poincaredisk »

wat10000 wrote: post #133
kweingar wrote: post #54

I keep hearing people express dismay that people are financing their lunch, sneakers, or concert tickets. But this has been the norm for a while, no? I can't remember the last time I didn't utilize credit at a restaurant or retail store. If you use credit cards, it doesn't make sense to reflexively admonish people for using BNPL for everyday purchases. To be sure, BNPL is in many ways a predatory innovation. But it i…

A lot of people are very skeptical of credit cards, and it’s pretty common to see people recommending against them or outright calling them evil with pretty much the same arguments you see here. Among those who like credit cards (of which I am one), the “credit” part is basically irrelevant. Paying for my stuff a few weeks later is nice, but it’s not why I use credit cards. If there was a card that offered an extra 0…

It's clear that this extra 0.5% is there, because the company hopes to make it up on late payment fees extracted from less financial savvy people, or the high fees.

Re: Burrito Now, Pay Later

#184

Post by poincaredisk »

kweingar wrote: post #54

I keep hearing people express dismay that people are financing their lunch, sneakers, or concert tickets. But this has been the norm for a while, no? I can't remember the last time I didn't utilize credit at a restaurant or retail store. If you use credit cards, it doesn't make sense to reflexively admonish people for using BNPL for everyday purchases. To be sure, BNPL is in many ways a predatory innovation. But it i…

>But this has been the norm for a while, no? I can't remember the last time I didn't utilize credit at a restaurant or retail store.

I'm not saying you're wrong, but I want to highlight that this is US specific. I'm in Europe, in my 30s and I never owned a credit card. The same goes for all my friends. Even ones who had to get a credit card for a trip to US, or got one from their bank without asking, don't use them.

Re: Burrito Now, Pay Later

#185

Post by thanksgiving »

poincaredisk wrote: post #174
ChadNauseam wrote: post #123

Earlier quoted context omitted.

Food is a basic human need, paying someone to make a burrito for you and then hand deliver it to your house is not. There is no shortage of food in america. In brazil, many people don’t eat meat because it’s too expensive, and get the vast majority of their calories from beans and rice. you can also do this in america, but almost no one does outside of college students because food is cheap enough relative to wages t…

Why only poor though? There's plenty of middle class people living above their means by abusing credit too. They can deal with the consequences better, but it's equally financially harmful for them

There is really no such thing as a middle class though. We are all n missed paychecks away from being unhoused.

Re: Burrito Now, Pay Later

#186

Post by petesergeant »

nkrisc wrote: post #149
ChadNauseam wrote: post #123

Earlier quoted context omitted.

Food is a basic human need, paying someone to make a burrito for you and then hand deliver it to your house is not. There is no shortage of food in america. In brazil, many people don’t eat meat because it’s too expensive, and get the vast majority of their calories from beans and rice. you can also do this in america, but almost no one does outside of college students because food is cheap enough relative to wages t…

There are many, many stupid people who would benefit from being protected from themselves. How far down that path we want to walk as a society is an eternal debate.

But sadly also a lot of not-stupid people who sometimes need to (or would benefit to) borrow on short notice, and it's better that they're doing that on a credit card with protections and that they can pay off. I've been both: easy credit in my youth ended up with me racking up a lot of silly debt that I had to spend several years living frugally to pay off, but also now that I'm much more financially secure, having some credit cards that work as a very cheap line of credit if I'm having a liquidity crunch is also very useful.

Re: Burrito Now, Pay Later

#187

Post by intended »

spicyusername wrote: post #100

One reason is that someone’s or a company’s income doesn’t always align perfectly with when they want to buy things. When we're talking about financing the construction of a new downtown office tower, a new apartment complex, or the unexpected maintenance of your business's whole auto fleet, I can absolutely see the argument that credit is a mechanism of greasing the wheels of the economy and allowing things to happe…

Yeah.

I get the argument for pricing risk. That’s a genuine improvement on the state of the art.

I dont get NINJA loans, because they represent an unfair fight - a sophisticated loan originator and sales team against people without the background and skills to judge that risk

Re: Burrito Now, Pay Later

#188

Post by ChadNauseam »

walrus01 wrote: post #176
ChadNauseam wrote: post #123

Earlier quoted context omitted.

Food is a basic human need, paying someone to make a burrito for you and then hand deliver it to your house is not. There is no shortage of food in america. In brazil, many people don’t eat meat because it’s too expensive, and get the vast majority of their calories from beans and rice. you can also do this in america, but almost no one does outside of college students because food is cheap enough relative to wages t…

> Food is a basic human need, paying someone to make a burrito for you and then hand deliver it to your house is not. There is no shortage of food in america. Do some googling about what is a "food desert", plenty of lower income people in the USA live somewhere that the grocery store options and fresh, nutritious ingredient shopping options are VERY poor. Or a costly distance away to drive on a regular basis. I am n…

The lack of food can be explained either by a shortage of demand or a shortage of supply. Many people assume that the demand is there and the supply is the problem - people are desperate for healthy food but no one wants to sell it to them for some reason (the reason is always left unsaid). Instead, they have no choice but to shop at 7/11. So presumably, as soon as a store selling fresh, nutritious ingredients opens up, it would be swarmed with people buying broccoli and chicken breasts. However there is some evidence that the reason no healthy food is being sold is because people's demand for heathy food is being provided by a supermarket a few miles away, or that they just have little demand for healthy food in the first place. Here is an article with more information: https://www.nyu.edu/about/news-publications/news/2019/decemb...

Re: Burrito Now, Pay Later

#189

Post by ipv6ipv4 »

The biggest problem with burrito loans is that they are selecting for sub-prime borrowers. Someone who needs to explicitly finance a burrito is much more likely to be a sub-prime borrower. Just like with the sub-prime mortgage implosion, the product of securitized junk is junk. At least it won't be a systemic risk this time.

Re: Burrito Now, Pay Later

#190

Post by ChadNauseam »

poincaredisk wrote: post #174
ChadNauseam wrote: post #123

Earlier quoted context omitted.

Food is a basic human need, paying someone to make a burrito for you and then hand deliver it to your house is not. There is no shortage of food in america. In brazil, many people don’t eat meat because it’s too expensive, and get the vast majority of their calories from beans and rice. you can also do this in america, but almost no one does outside of college students because food is cheap enough relative to wages t…

Why only poor though? There's plenty of middle class people living above their means by abusing credit too. They can deal with the consequences better, but it's equally financially harmful for them

Certainly, but there's less motivation to protect the middle class from poor financial decisions because it can be assumed that they have some financial leeway already and aren't going to be put on the street by one too many doordash orders. So they don't really factor into the discussion much
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