Economists worry about the lack of clarity and potential risks of the emerging payment method

  • U.S. shoppers spent $16.6 billion on buy-now-pay-later purchases during the holiday season
  • BNPL spending rose 14% in 2023, reaching $75 billion
  • Economists worry about the lack of clarity on the full size of the industry and the financial health of BNPL users
  • BNPL services allow shoppers to split purchases into installments, some interest-free
  • Concerns include overspending and limited transparency in the industry
  • Affirm Holdings Inc. shares rallied more than 400% in 2023
  • Regulators are monitoring BNPL’s momentum and credit reporting companies are working on including BNPL data in credit reports

Buy-now-pay-later purchases reached a new record during the holiday season, with U.S. shoppers spending $16.6 billion. BNPL spending rose 14% in 2023, reaching $75 billion. However, economists express concerns about the lack of clarity on the industry’s size and the financial health of BNPL users. While BNPL services offer flexibility and inclusion, there are worries about overspending and limited transparency. Affirm Holdings Inc. shares rallied over 400% in 2023, indicating investor interest. Regulators are monitoring BNPL’s momentum, and credit reporting companies are working on including BNPL data in credit reports to provide a more comprehensive view of consumers’ debts.

Public Companies: Wells Fargo (WFC), Adobe (ADBE), Affirm Holdings Inc. (AFRM), Equifax (EFX), Experian (EXPGY)
Private Companies:
Key People: Tim Quinlan (Senior Economist at Wells Fargo Economics), Shannon Seery Grein (Economist at Wells Fargo Economics), Vivek Pandya (Lead Analyst at Adobe Digital Insights)

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Factuality Level: 7
Justification: The article provides information on the increasing popularity of buy-now-pay-later (BNPL) purchases during the holiday season and throughout 2023. It also highlights concerns from economists about the lack of clarity on the full size of the industry and the financial health of BNPL users. The article includes quotes from economists and industry experts, as well as data from Adobe Analytics and the Consumer Financial Protection Bureau. While the article presents different perspectives on BNPL, it does not contain any misleading information or bias. However, it could benefit from providing more context on the potential risks and benefits of BNPL for consumers.

Noise Level: 3
Justification: The article contains some relevant information about the growth of buy-now-pay-later purchases and the concerns raised by economists. However, it also includes filler content such as information about the use of text-to-speech technology and unrelated information about the stock performance of Affirm Holdings Inc. Overall, the article could have been more focused and concise.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the growing popularity of buy-now-pay-later (BNPL) services and the concerns raised by economists about the lack of clarity on the full size of the industry and the financial health of BNPL users. This information could impact financial companies that offer BNPL services or are involved in the consumer credit industry.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article does not describe any extreme events.

Reported publicly: www.marketwatch.com