# How are "buy now, pay later" apps different than a credit card? **URL:** \ **Category:** Factual Questions\ **Created:** [August 2, 2021, 7:07pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890 "2021-08-02T19:07:41Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 2, 2021, 7:07pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/1 "2021-08-02T19:07:41Z")
It has made news today that Afterpay was just bough for $29 billion. I can’t figure out how this business model works (never even heard of such a thing until now). Sounds like what a credit card does but it’s not a credit card. > **[Square to buy Australia's Afterpay in $29 billion deal as 'buy now, pay...](https://www.cnbc.com/2021/08/02/square-to-buy-australia-fintech-afterpay-amid-buy-now-pay-later-trend.html)** > > Jack Dorsey's payment company announced a $29 billion, all-stock deal to buy Australia's Afterpay as the installment loan competition heats up. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 2, 2021, 7:17pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/2 "2021-08-02T19:17:35Z")
For one thing, from the link, “Afterpay lets customers pay in four interest-free installments and pay a fee if they miss an automated payment.” Most credit cards aren’t interest free. But yes, it’s an installment plan for purchases, which lots of retailers offer. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [August 2, 2021, 7:19pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/3 "2021-08-02T19:19:05Z")
I’d never heard of this before, but from the article, it appears that the difference is that the loan is interest-free to the consumer (as long as the installment payments are made on time) the cost being borne by the merchant who theoretically benefits from higher sales volume. Whereas credit cards charge the consumer an extortionate interest rate if the monthly balance isn’t paid in full. This looks like a commoditization of the “buy now pay later” interest-free plans traditionally offered by some merchants of big-ticket items and funded in-house. The snag was always that unless you adhered to the payment terms exactly, you’d get hit with significant interest charges. ETA: Ninja’d by @Dewey_Finn ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 2, 2021, 7:23pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/4 "2021-08-02T19:23:02Z")
I have _no_ idea why the company is worth spending $29 billion to buy. Surely you could build something similar for a lot less in some time? (Lots of these technology acquisitions astound me. I think Facebook bought Instagram for about a billion, which makes sense, but they bought WhatsApp for $18 billion or so, which makes less sense. And they three two billion or so at Oculus for their VR headset business.) ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [August 2, 2021, 7:29pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/5 "2021-08-02T19:29:07Z")
> [@Dewey\_Finn](#): > > I have _no_ idea why the company is worth spending $29 billion to buy. Surely you could build something similar for a lot less in some time? It’s less about the company or their service and more about their 7 million established customers. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 2, 2021, 7:29pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/6 "2021-08-02T19:29:53Z")
So they paid about $4,000 per existing customer. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 2, 2021, 7:30pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/7 "2021-08-02T19:30:21Z")
So how does Afterpay earn revenue that makes it worth $29 billion? Do they screw customers hard if they miss a payment? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 2, 2021, 7:32pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/8 "2021-08-02T19:32:39Z")
Possibly they have contacts in the olive oil industry who will enforce their contracts? Really, though, it’s an all-stock deal, so it’s kind of, sort of funny money. (I read somewhere that if a company does an acquisition for cash, it’s because they think their stock is undervalued but if they buy a company with stock, they think it’s overvalued.) ---
**Author:** ![Chingon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chingon/32/17645_2.png) [@Chingon](https://boards.straightdope.com/u/Chingon)\ **Post date:** [August 2, 2021, 7:33pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/9 "2021-08-02T19:33:16Z")
Data about the shopping habits of customers is very valuable. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 2, 2021, 7:35pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/10 "2021-08-02T19:35:51Z")
I get that data is valuable but are there no limits? There are so many companies out there selling personal data who is buying it all? I mean, at some point I will stop buying data. I can only use so much and I can only afford so much. The 100th electronic retailer trying to sell me their database just isn’t attractive anymore. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [August 2, 2021, 7:39pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/11 "2021-08-02T19:39:28Z")
Is this one of those things you still have to qualify for? I’ve only seen this on eBay I think it was, and I never used it because I had the money to it all upfront, and I find it easier to budget if the money is just gone, rather than having to anticipate it disappearing. ---
**Author:** ![Chingon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chingon/32/17645_2.png) [@Chingon](https://boards.straightdope.com/u/Chingon)\ **Post date:** [August 2, 2021, 7:40pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/12 "2021-08-02T19:40:25Z")
Ok, but I don’t think you control the market under discussion here. So you getting tired of something is rather irrelevant. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 2, 2021, 7:41pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/13 "2021-08-02T19:41:08Z")
Err…huh? Did I say something to piss you off? ---
**Author:** ![ISiddiqui](https://avatars.discourse-cdn.com/v4/letter/i/97f17d/32.png) [@ISiddiqui](https://boards.straightdope.com/u/ISiddiqui)\ **Post date:** [August 2, 2021, 7:56pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/14 "2021-08-02T19:56:53Z")
> [@Dewey\_Finn](#): > > they bought WhatsApp for $18 billion or so, which makes less sense Why does that make less sense? Outside the US, WhatsApp is basically the chat/text standard app. Government agencies use it to send information. ---
**Author:** ![ISiddiqui](https://avatars.discourse-cdn.com/v4/letter/i/97f17d/32.png) [@ISiddiqui](https://boards.straightdope.com/u/ISiddiqui)\ **Post date:** [August 2, 2021, 8:01pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/15 "2021-08-02T20:01:17Z")
> [@Whack-a-Mole](#): > > I get that data is valuable but are there no limits? Why exactly do you think Google is worth so much money? They are first and foremost an ad company. Companies pay Google to provide targeted ads to folks and since Google knows so much about people it can adequately target those ads properly. Facebook is worth a lot of money for the same reason. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 2, 2021, 8:04pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/16 "2021-08-02T20:04:27Z")
I get there is huge value there. But money is finite. Any company can only afford to buy so much data and there seem to he a helluva lot of companies selling it. If I buy from Google and Amazon and Facebook do I want to buy from Afterpay too? Surely there are limits. ---
**Author:** ![ISiddiqui](https://avatars.discourse-cdn.com/v4/letter/i/97f17d/32.png) [@ISiddiqui](https://boards.straightdope.com/u/ISiddiqui)\ **Post date:** [August 2, 2021, 8:10pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/17 "2021-08-02T20:10:40Z")
> [@Whack-a-Mole](#): > > Surely there are limits. Apparently not. More data allows one to further fine tune their targeted ad buys/sales. > [@Whack-a-Mole](#): > > If I buy from Google and Amazon and Facebook do I want to buy from Afterpay too? Well, when it comes to Google and Facebook you aren’t actually buying data. You are providing an ad to those companies so they can use their targeted data to determine the best possible people to show the ad to. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 2, 2021, 8:14pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/18 "2021-08-02T20:14:47Z")
> [@ISiddiqui](#): > > Apparently not. More data allows one to further fine tune their targeted ad buys/sales. Money is finite. Eventually, any company will no longer have money to buy data. ---
**Author:** ![ISiddiqui](https://avatars.discourse-cdn.com/v4/letter/i/97f17d/32.png) [@ISiddiqui](https://boards.straightdope.com/u/ISiddiqui)\ **Post date:** [August 2, 2021, 8:15pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/19 "2021-08-02T20:15:34Z")
> [@Whack-a-Mole](#): > > Eventually any company will no longer have money to buy data. Thankfully no one is actually buying data. They are placing ads with the people who have all the data. ---
**Author:** ![mixdenny](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mixdenny/32/2962_2.png) [@mixdenny](https://boards.straightdope.com/u/mixdenny)\ **Post date:** [August 2, 2021, 8:18pm UTC](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890/20 "2021-08-02T20:18:31Z")
> [@Whack-a-Mole](#): > > So how does Afterpay earn revenue that makes it worth $29 billion? > > Do they screw customers hard if they miss a payment? No You only have to make minimum payments and pay the balance by the due date. Of course they are hoping enough people don’t pay by then and extend the payments (with accrued interest) for several more months.These are just standard 6 month or 12 month no interest accounts. They have been in the US forever. Don’t other countries have them? [Next page](https://boards.straightdope.com/t/how-are-buy-now-pay-later-apps-different-than-a-credit-card/947890.md?page=2)