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Burrito Now, Pay Later

enterprisevalue.substack.com

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Re: Burrito Now, Pay Later

#221

Post by catlikesshrimp »

lumost wrote: post #193
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…

Curiously, medieval societies struggled with “usury”. Effectively being a wage earner was a tough game as you might owe rent, have a bad month, or end up overly indebted. Most wage earners eventually became indentured servants or worse. This contrasts with peasants who had permanent land rights and owned everything they produced, and did not have a fixed rent. It’s not just that people don’t understand debt, it’s tha…

>"This contrasts with peasants who had permanent land rights and owned everything they produced, and did not have a fixed rent"

There are places where they didn't own anything. Decades ago I read that at some point each feudal lord coined his own currency for his peasants. If a peasant escaped, he wouldn't have means to take anything with him.

Same in Russia. A couple centuries ago, serfs came with the land. They could be liberated if the owner decided it. However, being a free man is quite difficult without a job.

Re: Burrito Now, Pay Later

#223

Post by InsideOutSanta »

ChadNauseam wrote: post #123
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…

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…

> But it sounds very patronizing to say the “there’s a lot of poor people who don’t understand credit, so we need to prevent them from having access to any so they don’t get the chance to screw themselves”, so I understand why no one does.

OTOH, the article literally says that "data [shows] that those with lower incomes, lower education, and worse credit (redundancies here) are more likely to use BNPL."

Most consumer protection laws are somewhat patronizing, but since you can't be an expert in everything, we need them.

Re: Burrito Now, Pay Later

#224

Post by TwoFerMaggie »

bcoates wrote: post #81
zug_zug wrote: post #12

I think this would be more informative if it dropped all moral pretense and just talked about the economics objectively. If we’re gonna call a spade a spade, bnpl is one of a dozen services that extracts money from those whose judgment we doubt (like gambling, lottery, junk food?, drugs, overpriced status-symbol vehicles, or even “digital goods”).

But if you read the article, it doesn’t? bnpl makes its money off charging merchants a few points higher service fees than cards, which for a lot of merchants is worth it to close the deal. (Unstated in the article is that richer people with better credit have regular access to no-interest/negative fee consumer loans on the order of 6-18 mos., so they have no reason to use BNPL)

But why would the merchants willing to pay the fees in providing a BNPL scheme for their customers?

One would assume that it would increase sales, which makes it worthwhile. It's not caused by increase outreach though: from what I've seen, BNPL is usually an additional payment option when you're already on the product page.

Then the question becomes: who are the extra customers that a BNPL scheme would bring, that wouldn't have made the purchase if such a scheme was not available?

Re: Burrito Now, Pay Later

#225

Post by TwoFerMaggie »

coolcase wrote: post #2

He brushes over ethical concerns of BNPL but draws the line at sports betting. But BNPL by design encourages you to buy things you can't afford and complicates your finances with more timed bills to pay. It makes it more likely people don't budget well and form buffers. A PNBL would be better, add 10% tithe to every purchase that goes to a checking account. Once that reaches $1k it overflows to an index fund. He says…

PNBL was a thing at some point (https://en.wikipedia.org/wiki/Layaway) but was rendered obsolete by the advent of credit cards. Seems to me like a personal austerity measure which becomes more popular in worse economic conditions. The cynic in me believes that there's more money to be made when you encourage people to spend less responsibly and with less financial literacy.

Re: Burrito Now, Pay Later

#226

Post by wodenokoto »

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…

I buy all my food on credit, using my visa credit card.

But more to your point, your examples are absurd. You set the bar ridiculously high.

Of course it is okay to buy a single car or a single apartment on credit, as a normal consumer. Getting finance is not the exclusive domain of large, corporate investments.

Re: Burrito Now, Pay Later

#227

Post by justincormack »

twoodfin wrote: post #202
yreg wrote: post #196

Earlier quoted context omitted.

Convincing people to finance their groceries is absurd. Ideally, everyone should have a few months’ worth of income saved. And if they do, there's zero reason to finance a burrito. In the Western world, if you have a job but no savings buffer, it’s usually not due to extreme poverty—it’s often a lack of basic financial literacy. Klarna, et al. market in direct opposition to that education.

I finance all my burritos: It’s fantastically more convenient than cash, incrementally builds my credit rating, & I capture some of the efficiency surplus via rewards points. The article makes the point that BNPL packages up almost the same product into a bite-sized, low-risk (for both the borrower and the lender) package, making it available to everyone. Indeed, that does sound like a good thing.

Its not an "efficiency surplus" that you get via rewards it is a monopoly surplus.

Re: Burrito Now, Pay Later

#228

Post by flakeoil »

aianus wrote: post #191
ivanbalepin wrote: post #165

Enjoyed the article, but the author was correctly questioned in the substack comments how is this any different than a credit card for the borrower and what justifies the "interest-free" myth here, since the BNPL payoff period largely overlaps with the CC grace period. To which the author responds: > Credit card float only lasts if you pay the full statement balance by the due date but that is identical to BNPL, it's…

You can pay the BNPL with a credit card to take advantage of both interest-free periods and get credit card points. There is really no reason not to use BNPL, even if you can pay cash.

Yes, there is. You take on a risk of forgetting to pay or that there is missing cash on your account so that the payment does not get done. Now you all of a sudden have to pay interest. And for what benefit, just to lend the cash for free for a month? What would you do with that cash for one month which is so profitable and risk free to compensate for the quite high risk of missing one of those BNPL invoices?

Re: Burrito Now, Pay Later

#229

Post by jazzcomputer »

As someone who has no interest in using this facility, I find it interesting that the author 'enjoys' BNPL, when they are not the main customer (unless I'm mistaken, it's people with limited cash flow). Enjoy in what way? - I guess the economic mechanism being something that wasn't previously applied to a basic human need? - I think the answer there for me is that this is emblematic of late-stage capitalism (which may perhaps last 100s of years), but it's a fine example in my mind because there are much more serious problems that could be solved with getting food to people.

Re: Burrito Now, Pay Later

#230

Post by twoodfin »

justincormack wrote: post #227
twoodfin wrote: post #202

Earlier quoted context omitted.

I finance all my burritos: It’s fantastically more convenient than cash, incrementally builds my credit rating, & I capture some of the efficiency surplus via rewards points. The article makes the point that BNPL packages up almost the same product into a bite-sized, low-risk (for both the borrower and the lender) package, making it available to everyone. Indeed, that does sound like a good thing.

Its not an "efficiency surplus" that you get via rewards it is a monopoly surplus.

Not at all. If merchants wanted to ditch high-fee credit cards and spend the money they save on advertising or lower prices to win back the customers they lose as a result, they could do that tomorrow. Cash and debit cards are available alternatives.

They don’t because it would be a worse use of their $$.

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