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‘Pay later’ is booming with a wave of companies launching installments

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Visitors play video games at the Xbox stand during 2020 China International Cartoon and Game Expo (CCG Expo) at Shanghai World Expo Exhibition and Convention Center on July 16, 2020 in Shanghai, China.

Zhou You | Visual China Group | Getty Images

A wave of major companies are suddenly letting people finance everything from video game consoles to hair products in smaller, monthly payments. 

These so-called installment loans have been around for decades, and historically used for big-ticket purchases such as furniture. But online payment players and fintechs are rushing to launch their own version of a “pay later” product for online items in the hundreds of dollars.

“There’s no question this is on the rise,” said JMP Securities analyst David Scharf. “The application of pay later in a digital environment has definitely gained traction.”

This week, Microsoft announced it would let consumers finance the new $499 XBox in monthly payments, through a partnership with Citizens Bank in the U.S., and fintech company Klarna in the U.K. PayPal announced an installment product last week, and Mastercard and Fiserv both announced new partnerships to expand installment options in recent days. American Express, Citi and J.P. Morgan Chase are offering similar products.

The point-of-sale loans lets consumers buy something in increments, often without interest. Companies may eventually charge interest down the road, as well as late fees or processing fees. Similar to a credit card issuer, they may also get a percentage of the transaction price. More than a third of U.S. consumers have used a “buy now, pay later” service, according to a study published this summer by Ascent. The majority of those those surveyed used it to avoid paying credit card interest, or buy something “not in their budget.”

“Their sweet spot is young adults, particularly those who want to buy something now and don’t necessarily have the money on hand,” said Ted Rossman, an analyst at CreditCards.com. “These individuals are often wary of debt and may not have a ready alternative such as a credit card.”

Affirm has been one of the more popular, fast-growing start-ups in the space. It announced a partnership with Shopify earlier this year, and works with 6,000 merchants including Peloton, Expedia and Walmart. The company, which is reportedly eyeing a public offering, grew from 3 million customers in November to more than 5.6 million this in July. Following stay-at-home orders in March, Affirm told CNBC it saw the home fitness category grow 163%, home office grew 200%, and kitchen supplies up 70%. 

Fine print

The ease of signing up and popularity may distract from the fine print of these financial agreements. Only 22% of respondents from the Ascent survey said they “fully understand” the terms and conditions of using installment payments. Of those who avoid using installment payments, 49% said it’s because they don’t understand how these services work.

“You can still get into trouble if you don’t make the payments —  the biggest downside is that it’s people are using it without totally understanding what it means,” Dann Albright, financial research analyst at The Ascent, told CNBC. “There are still late fees, interests on late fees, and interest payments for most of the plans but it’s not always clear what those are.”

Another potential downside is that most of these programs don’t help you build credit, because they don’t typically report to credit bureaus, Creditcard.com’s Rossman told CNBC. Affirm reports to Experian, for example, but popular start-ups Afterpay and Klarna, don’t. Some resort to collections agencies if needed, and can bar you from future payment plans if you fall behind. 

Doug Bland, PayPal senior vice president of global credit, said the PayPal “Pay in Four” product was aimed at helping businesses drive sales without increasing costs, and giving consumers more flexibility. Like anything, Bland said there may be outliers of the “extreme” when it comes to overspending. But he predicted consumers will use installments in a healthy way.

“That’s certainly not something that that we want to see happen and we’re incredibly sensitive to ensuring that people understand the use of the product,” Bland told CNBC. “For the most part, people are going to use this in a responsible way.”

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Facebook Dating lands in Europe as singles look for love in lockdown

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LONDON — Facebook announced Thursday that it has expanded its dating service to Europe, a little over a year after it launched in the U.S.

The platform, known simply as “Facebook Dating,” is designed to help Facebook users find partners through things they have in common such as interests, events and groups. Those wanting to opt-in to the service, which has a dedicated space in the Facebook app, must set up a Facebook Dating profile.

Once registered, Facebook users can share personal “Stories” on their dating profile, as well as Stories from their main Facebook or Instagram account.”(assume end quote here?)

There’s also a “Secret Crush” feature that enables users to select up nine Facebook friends or Instagram followers that they’re interested in. If one of those people also selects you as their crush then a match is generated. Here is a bit more on how it all works.

Julia Portelly, a 26-year-old PR consultant, told CNBC that she’ll definitely have a “poke around” the new dating service despite not using Facebook much these days. “I’m wondering if they [Facebook] will bring something completely new to the game, or just pinch features and repurpose them?” she said.

PR consultant Julia Portelly says she plans to “poke around” on Facebook Dating.

Julia Portelly

Another dating app user said: “I don’t use Facebook much anymore and I don’t know if I trust their ability to check people’s identities, so probably not for me.”

Unlike other dating services such as Tinder, Hinge, and Bumble, the Facebook Dating feature is completely free to use, with no premium offering.

A single male teacher in his early 30s told CNBC: “So many services these days taunt you with potential matches but then hide them behind paywalls. Set love free I say — I’m ready for Facebook to help set this straight.”

Dating has been upended by the coronavirus pandemic, with lockdowns and social distancing measures making in-person dates difficult in countries around the world. Politicians have faced tricky questions on the matter, with U.K. Prime Minister Boris Johnson last week saying “sex indoors” is banned for couples living in separate households in certain parts of the country.

Facebook said it is in the process of rolling out a feature that will allow singles who have matched on Facebook Dating to have video chats.

First announced at Facebook’s F8 developer conference in May 2018, the dating feature launched in the U.S. in September 2019, immediately sending shares in Match, which owns dating app Tinder, down 4.5%. The service is now available in 52 countries worldwide including 32 in Europe.

Facebook claims that the platform has generated 1.5 billion matches across 20 countries since it launched. The company did not immediately respond when CNBC asked how many of its users have opted-in to Facebook Dating.

Shaz Younas, chief executive and founder of Muslim dating app muzmatch, said Facebook Dating has been a bit of a “non-event” so far.

“Match group stock dipped when it was announced but quickly recovered,” said Younas, a former investment banker with Morgan Stanley. “Facebook branding isn’t great, but it cannot be underestimated.”

“Facebook’s ability to match . . . individuals based on their actual behavior is unparalleled. That is a real edge for them that no one can match. Even if 1% of their userbase uses it, that is still a wildly successful product purely based on their size. That said, as has been shown in the dating world, dating app members are often on multiple platforms, so anything to normalise people using dating app products only helps the sector too.”


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Airbnb teaming up with former Apple design boss Jony Ive

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SAN JOSE, CALIFORNIA – JUNE 03: Apple chief design officer Jony Ive (L) uses an iPad.

Justin Sullivan | Getty Images News | Getty Images

Former Apple Chief Design Officer Jony Ive will consult with Airbnb on hiring and future products, the company announced on Wednesday.

Ive is best known for being Apple’s longtime head of industrial design and an icon in Silicon Valley. He led teams that designed the iPod, iPhone, and Apple Watch before leaving the company last summer to start an independent design firm named LoveFrom, which counts Apple as a client.

Ive and LoveFrom will help Airbnb over a period of multiple years to design new products and services, as well as hire designers for an internal team, Airbnb CEO Brian Chesky said in a blog post.

“Jony and I have been good friends for many years, and he has been gracious enough to provide me with guidance and advice,” Chesky wrote. “We share the same belief in the value and importance of creativity and design.”

Chesky is notable among Silicon Valley founders for going to Rhode Island School of Design, where he majored in industrial design. Previously, Ive wrote an entry for Time magazine lauding Chesky and praising his background as a designer.

Airbnb struggled in the early days of the coronavirus pandemic, as lockdowns across the world curtailed travel plans, and the company laid off 25% of its staff in May. However, the company has since seen a resurgence in demand as city residents with the option to work remotely started booking stays in rural locations.

Airbnb said in August that it confidentially filed for an IPO. Reuters reported earlier this month that Airbnb is hoping to raise $3 billion in its IPO, which is expected to be one of the biggest stock market listings in 2020.


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Quibi to reportedly shut down after just 6 months

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Jeffrey Katzenberg at CES

Source: CNBC

Quibi, the short-form entertainment service for mobile devices, will shut down operations just over six months after its launch, The Wall Street Journal reported Wednesday.

The company, which was founded by Hollywood producer Jeffrey Katzenberg and former HP CEO Meg Whitman, raised nearly $2 billion ahead of its launch in April.

This story is developing.


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