 BNPL. What does that mean? Buy now, pay later. As you guys and girls can see today's topic, we're going to be talking about the rise of BNPL. It's the acronym people have to use for it. Buy now and pay later. And what does that mean? But ladies and gentlemen, if you haven't done so already, go ahead and make sure you hit that like, subscribe, comment, share button, drop a comment below. And also don't forget to share this with your friends. But as always, I'm your host, Prince Dax. This is the Prince of Investment. I don't have a lot of time. And I definitely, you guys and girls don't have a lot of time. So we're going to jump straight into it. So I will say this topic, let's start off with this. Every time, you know, my financial background, every time I hear of, hey, buy now, pay later, you know, no credit for the first 60 months, no credit for the first 60 days, put nothing down, put a little down, put a little bit down. Every time I hear those things, I automatically think that, okay, there's some type of catch to it. Which it is, because credit card companies are spending billions and billions and billions of dollars on research and development on consumers behavior. For prime example, they say, hey, you go to buy a t-shirt at Macy's or whatever the case may be. And they say, hey, do you want to sign up for a credit card? I still brought credit card. We'll take off 10% of your, we'll take off 10% of your purchase price today and you get the first six months of no interest. You're like, wow, that's an amazing deal. I can get, I can get money back on my purchase today and it's going to take one of my deal. Why wouldn't I sign up? And you always ask yourself the question, well, how do credit card companies make money? Let's take an example. American Express and Visa, the top two and MasterCard, the top credit cards in the world are making billions and billions of dollars. Why? Because they know, hey, all we've got to do is find a way to, one, get this credit card in your hand. Two, let's get you to start using it. And yes, the first month, you're going to pay off all your bills. The second month, you're going to pay off all your bills. The third month, but eventually that credit card is going to start to carry a balance. And boy, oh boy, when it does, that's when they're going to rake up on all the back, all the money they put up front. So right now they do whatever it takes to get you into a credit card or a loan or whatever. And then you're going to think like, oh, I get a reward points and I take these points in this point. Now, granted, I will say this, I will caveat this. We're saying this, I do have some friends and know some buddies that know how to get the reward points from American Express and apply them with the Visa rewards points only shop online with this credit card, get the American Express goal for this, get the American Express Platinum for that, get the Visa, whatever the case may be, Chase has a new cash back, keep it for 40 days. Now, those are streamed people. That's almost like what you see with coupons. You know, the extreme coupons, the people who collect so many coupons that they practically get everything for free. That's kind of like on the stream, on the stream side, on the average side, most people are going to be talked into using the credit card or they're going to go back to the historical belief of the way consumers behave. Now, before we get into it, let's do a little history. Let's go back to how did credit cards come about? When you think about our great grandparents and our grandparents, in some cases, depending on how old you are, they kind of lived off of if I don't have the cash, I don't buy it. Why? At that time, credit was not popular. Credit was very hard to get. Companies, they only offer that to businesses and business loans and things like that. Not to everyday consumer. If your mom and dad needed a new refrigerator, guess what they did? They put up a little donation tip jar and they kind of saved up their money and then when they finally got that money for the refrigerator, they will go buy it. The same thing to do, your dad wants to go buy your mom that nice pearl earrings for anniversary. Guess what he would do? He would save up his money and he would wait until he brought it. If the kids needed back to school clothes, we didn't go say, hey, let's go use credit. It was people kind of save their money because you, you know, that was just a way of life until the rolling 20s, right before the rolling 20s came about, all of a sudden became consumer debt. When companies started to realize, hey, you know what? You want to get that washing machine? Don't have to, you don't have to save your money for the next seven to eight months and then get the washing machine. You can get it now, pay it later. This is the birth, the real strong birth of our credit card system. Now, it's kind of a way of life. Who doesn't have a credit card? You know, you practically can't live without a credit card. Essentially, kids have credit cards, things like that. So now, how did this happen? How did we get to this point? Now, you fast forward to 2021. It's just a way of life. Everybody got credit cards. If not, I think the average, I read some studies, the average person has two to three credit cards. Just swipe, swipe, swipe. We'll pay for it later. I don't care what the interest is. I'll pay it back. Don't worry about it, right? So now, the revolution has taken place, I believe. Now, when I very first saw this, this by now, pay later thing, I said, okay, sounds like a credit card. Next, didn't catch my attention at all. This started to catch my attention until I saw companies like Affirm just blow up. Then I saw companies like, what was the other company? Athopay. That's another one. Apple Pay just blew up Australian based by now, pay later company. It blew up so big that Swear, if you know Swear, Swear owns Cash App. Swear brought it out. Like, hmm, very interesting. Now, we all know Swear, you know, if you're not familiar with Swear, you know, people who have iPads and iPhones, it's a little white card, a little white little Swear box, you put onto your phone and you can swipe cards. You can swipe, you know, insert credit cards, all that type of stuff like that. Or you don't have to do that no more anyway. You just kind of download the Swear app and let's say me for a prime example, I've used it before when I've done book signings in person. So, I would sit at a table, someone would come up and say, hey, let me buy five of your books. I would type it in, boom, boom, boom, boom. I would send them the invoice. They would give me their credit card information. I would pump it, punch it into my Swear app and next thing you know, it would charge them. They would sign for it. They'd get a receipt in their email. Great idea, right? So, now when I look at this, this new phenom that has changed everything, so then I start to read into it. I said, what's going on? PayPal, they're in the fintech business. Why did they just jump on to, why did they just jump on to buy this Japanese company? I think for 2.9 billion, if I'm not mistaken, or it could be million, don't quote me on that, but they purchased this, the main subject is that they purchased this Japanese buy now, pay later company. Before that, you had Swear. During their earnings call, said, hey, we're buying Athapay for 2.9 billion dollars. Then you'll send a company like Affirm, just swell up. I'm like, so why would I want to use the buy now, pay later app when I have a credit card? You know, I'm more of an American Express type person. I have an American Express. I have a visa for my own personal use. Mostly I use my American Express. So, why do I want to stop using my American Express to use this, right? Then I ask myself the question, why would I want to do this, right? And I started to realize, let me take a look at this business model. Credit cards, you know how it works. They send you a credit card, it has a credit limit. Some of them don't. Most Americans express some of them don't have limits on them, as long as you pay them off at the end of the month. They send it to you. Then they say, hey, we're going to give you all these type of awards. If you eat at Ruby Tuesday, you get five times a point. If you take a Uber, you're going to get two times a point. If you eat Chinese food, you're going to get four types of points, right? We all know how that works. Then you know what? You go in, you swipe up your card. Eventually you're going to carry a balance, credit card, company charges you. Interest, you pay them back with interest. Pretty simple concept, right? Then I looked at the buy, I said that's considered buy now, pay later, right? Because I don't have the money. I can go out right now and with no money and with my credit cards, probably have somewhere probably half a million dollars to spend, right? Just credit cards and lines of credit, things like that, that you have available to you if you got pretty good credit. What's going to happen is you're going to take this credit card. Credit card company makes money when people overspend. That's the only reason why people use credit cards because they overspend. For prime example, if I see someone carrying a large credit card debt, it's a simple concept. They are spending more than they make. That was unheard of back in the turn of the century, in the 1900s, right? But in the 20s it became very popular. So nowadays is like, hey, who doesn't have a credit card debt? It's almost, you looked at as a zombie if you don't have a credit card debt, right? So now when you're carrying this large amount of credit card debt, guess what? That's when the, that's when the credit card companies start to charge you 17 percent, 20 percent, 15 percent, 10 percent, whatever they want to charge you. Now, why is it so high? Why is the credit card so high versus a car loan? Car loan may be two to three percent, but the credit card is going to be 12, 14, 15 percent. The reason why is credit cards are so high because they cannot, is there's no underlying asset to recoup on? For prime example, you know, I purchased my house, I think it was 2.75. Why? You don't pay for it? They get a house. They gave you, they gave me a $400,000 loan to purchase a home. Now the house is worth $500,000. If I don't purchase the loan, guess what? They get a half a million dollar house. Sounds like a pretty good deal for them, right? So for prime example, it's backed by something. When you go buy a car, hey, I went and bought a brand new truck, right? Wasn't brand new, but it was brand new to me. You go buy a brand new truck, or you buy a new truck. Truck costs $50,000. They give it to you for three percent. Why? Because push comes to shove. If you don't pay the loan, guess what? They're going to come out and take your car anyway. So it's backed by something. If you wreck the car, you got full coverage on it. So the risk level is not as high, but with credit cards, most people don't even know who they owe and why they owe, right? There's nothing to recoup. It's just a bunch of junk that somebody purchased. So we'll kind of understand how credit cards make make money. Now we're going to take a quick break, and I mean a very quick break, and after the break, we're going to get into how being in PLs by now paid later, how they make money, and how they are revolutionizing the way that credit is done and why it caught my attention. So we're going to take a quick break. We'll be back after the break. Dr. Kamori, host of Beyond the Lines on Think Tech, Hawaii. I was the head coach of the Punahou Boys varsity tennis team for 22 years, and we were fortunate to win 22 consecutive state championships. My show is based on my two books, Beyond the Lines and Beyond the Game, which is about leadership, success, character, and creating a superior culture of excellence. Please tune in and watch my show every Monday at 11 a.m. on Think Tech, Hawaii, and on YouTube. Aloha. And we are back here. My name is Prince Dykes. This is the Prince of Investment coming to you guys and girls live all the way from a beautiful city and state of Denver, Colorado, via Halalulu, Hawaii. Ladies gentlemen, if you haven't caught the beginning of this episode, we was talking about the rise of BNPL. Buy now, pay later. Now, earlier in the show, we talked about the rise of this. What caught my attention about it, and we did a little history about why does everybody credit card is just a way of life. You know, everybody has a credit card. My son, his name is on my credit card, you know, to build his credit, things like that. So, you know, kids have credit cards, adults have credit cards. It's just a way of life. If you say, hey, I owe $5,000 on a credit card, nobody's going to be like, why do you owe so much on a credit card? They're not going to care, because it's just a way of life. It's kind of the weight, the American weight nowadays. But let's go back to a time when that wasn't the case. Before credit became very popular, people just say that they're money and purchase what they wanted. That's what families did. So credit cards came along and rolled in 20s and rolled us into a new way of doing finances. Why wait and save your money when you can buy it now and pay for it later? That became a way of life. Now, we're faced with it today. It is a way of life, but in 2020 and 2021, we're seeing the rise of a new way of doing credit. Early in the show, we talked about how credit cards make money. Pretty simple concept. They give you a credit card, offer you all type of crazy rewards so you can use it and you use it. Eventually, you're going to start carrying it alone. I'm not alone. You're going to start carrying the balance. When you start to carry that balance, they're going to charge you interest that is astronomical compared to other things. So you're going to get charged high interest and once you get charged high interest, that's how the companies make money and you look at the average household. I think the credit average credit card debt for a household is like $20,000 average. So you do that around America. You see how much consumer debt we have and if you had one percent of that money, credit card, master card, American Express and Visa, they won't be going out of business soon. Until now. Now, let's get into buy now pay later. How does buy now pay later is different. When I saw it and I heard about it earlier in the show, I told you I thought it was a scam, some type of get rich, pay, whatever funny business. I said, what is this? Why would I use this? Why would I put down my credit card and download the at the pay app or a firm app or what is the other ones to call some other split the bill, a pay or whatever the case may be? Why would I buy these buy now pay later apps? What's so good about them? Then I looked at the business model. Would you believe people are utilizing these things because they allow you to buy, let's say today I went in, I went to go buy a $500 watch. They allow me to go in and buy a $500 watch today and break it up into four monthly payments of what it would that be about $250. You know that $250 that'll be around about $125. $125 for four months and pay it back so I can go and buy it now, don't have to worry about anything for so many days, something like two weeks or something like that, then I can just make installments. Guess what? With no interest. So people now on Amazon, people that are using retailers, Amazon, things like that, when we look at the pandemic, the pandemic has pushed us and pushed us to a massive level. As we know brick and mortar have been struggling. We're seeing places like Sears closed down and we're here in places like Amazon going through the roof, meaning that more people, more and more customers are buying online. To the new generation, don't even know what it's like to probably go to the mall and hang out and buy clothes. They know to pick up their app and they can buy whatever shirt they want, occasionally they may go to a mall, but it's nothing to buy clothes online now, to consume anything online, books, anything that you want online. Now what this what this being said is that now the new millennials like the buy now pay later with no interest. So when I saw this, I said, well, wait, wait, wait, this doesn't make sense. You go let me buy something today, pay for it later, break it up into installments. There's zero interest as long as I make all my payments and that's it. No catch, no balance. What is going on? Then I kind of realized that by now pay later companies, what they do, they partner with major retailers and banks. So for prime example, they will partner with someone like, let's say for example, Amazon, and they will say, hey, Amazon. Well, we already know credit card companies, they make their money two ways, ladies and gentlemen, I forgot to mention other way. They make their money from one, you can a balanced and two, every time you swipe their car, American Express, it calls up Amazon says, hey, we want a piece of their balance. We want a piece for every transaction, whatever type of deal they may have, you know, charging two percent per transaction, whatever, these are the same way. So let's say when you go in and buy your gas, when you buy your gas, the merchants being charged for you using their way of transferring money. So with that being said, that's one way they make money. Now, with these by now pay later companies came in and said, they said, hey, instead of just charging two percent, we're going to charge you five percent, but we're going to front the bill, meaning a.k.a. Let's take I go in, I say, hey, I want this five hundred dollar watch, a firm, for example, and I sense exactly how they do it in particular, but companies do this, where they're saying, hey, Macy's, we're going to give you five hundred dollars today, right? But we're going to charge you five percent for this person using a firm and a person is going to say, okay, Macy's is going to say, okay, no problem. We sold a five hundred dollar watch, we don't have a problem with giving you five percent of the deal, deal, they give you five percent of the deal. Now, you have to pay it back in four months. I don't have any credit checks. There's no credit checks done or anything like that as long as I pay my bills back. And that's it. So these companies could guess what the consumer loves the idea of what I don't have to get my credit checked. I can buy something, I can pay for something later with zero interest. I like this. Consumers 11 and these buy now pay back pay pay later. They are using the consumers as a way to make the money. They're saying, hey, Macy's, you don't have to pay us a thing unless someone uses someone buys a product from you and uses it via us. Changing the game completely. Now it is they do charge retailers more with how it changes the game more because guess what? The old business model was for credit card companies to say, hey, we're going to offer all type of rewards for you to use our credit card. We're going to give you all these types of rewards that you got to claim. We're going to give you cash back. That's their way to get people to use it. Buy now pay later is saying, hey, we're not even going to charge you interest. You can break it up into payments. You want to take two months to pay it back. You want to take four months, need four payments to pay it back. We'll split up into four payments, pay us back later. And we're not going to charge you an interest. This is how they're getting people to attract people to come in. And by them not charging interest, they are passing the buck on to the retailers. They're sticking to the retailers and taking the burden off of customers and placing on the retailers. We all know this old saying, when businesses compete, consumers win. So now you have all these consumers, especially with the young millennials, you know the older generation. We're old, we're so used to our credit cards, whatever. But the younger generation, they're like, hey, you know what? Yeah, I can buy my poultry today or I can go in and buy me an outfit for the dance tonight. And I'm going to go to the dance and I can pay it back later. And when I get paid on Friday, I can put something on it, make my payment there, make my payment there, and I complete no interest. And if I do not pay within the four weeks, guess what? I start to care of balance and I have to open up for interest. Now, the big risk we buy now pay later, they don't do credit checks. So if you don't do consumer credit checks, that kind of worries me. What if someone gets in there and buys a bunch of stuff, doesn't pay it back. Now this company cares the losses, but apparently it's working and it's working very well. So you're seeing this and I think that this is a new way of doing credit of pushing credit into the consumer's new hands. Now you look at the new, you look at the millennials who usually will use a credit card are now using an app and saying, hey, I can buy something now and pay it later. And you see the big boys come along, PayPal, hit come square, hit come to traditional banks, they're all getting on board. This is what made this industry very hot, very relevant, and was making it swell. You see these big evaluations because they're getting so many millennials, they're doing it two ways. They're getting so many millennials on their platform. And then they're marketing products, they're selling advertising to these companies. So they're selling advertising to millennials. So that's one way they're probably making money. Then they're charging the retailers every time a millennial millennial uses their product, not even a millennial, but a person in general. And then on top of that, to reward them and say, hey, you know what, take four, take four payments to pay us back or three payments to pay us back. Now granted, all by now, pay laders don't work the exact same, but they all have the similar premises of, hey, we're going to, you're going to buy it now, we're going to break it up into installments and you're going to play little to nothing later as long as you pay it off within four installments. Guys and girls, let me know what y'all think about that episode. What do y'all think about buying now and pay later? And you have stocks out there. You have a square that just jumped into the game. You have PayPal that just jumped into it. You have at the pay, you got a firm. It's a couple other stocks out there that I was kind of looking around. So do you do diligence and take a look at it? And ladies and gentlemen, I want to make sure you understand that this is not a financial advice show. I'm not giving anybody advice. This is just a financial literacy show. We're going to talk about different financial topics and things that I see. All right. But anyway, ladies and gentlemen, boys and girls and children of all ages, my name is Prince Dykes. I'm the Prince of Investment. Until the next video, podcast, cartoon, or whatever else craze you see me do around the globe, peace, be safe. I'm out and thank you.