A Future under Wraps

As organized as it looks with all its structures, the world is actually a very volatile place. To contextualize the statement, you only have to look at how it plays backdrop for all the clashes between our interests. Now, it’s not to say that such a dynamic is impossible to coexist with, but the problem appears when we take unethical routes to gain an advantage over the opposing voice. The ripple effects of doing so are well-known to be devastating; hence we have set-up certain regulatory bodies across the board. These regulatory bodies carry a sole purpose of ensuring order within their domain, except even this straightforward setup can, at times, become a tough gig. For instance, ever since technology has entered the world’s fabric, the rule breakers have enjoyed a convenient hideout from the regulatory eye. A direct consequence to emerge here touches on record high cases of unscrupulous activities happening all over the place. Nevertheless, the regulatory industry seems to have no plans of conceding defeat yet, as it gears up for a long battle forward. In a latest bid to assert its authority, the industry takes on some new-age fintech platforms.

The Consumer Financial Protection Bureau has ordered several “buy now, pay later” apps, including Affirm, Afterpay, Klarna, PayPal, and Zip to provide more information regarding the risks and benefits associated with their product. As per some reports, the order is motivated by CFPB’s concern over customer’s potential to quickly accumulate debt through BNPL services. Furthermore, elements like insufficient regulatory disclosures and harvesting of data have also done a lot to harm the concept’s credibility. The order didn’t take long to trigger a freefall in the stock price of many BNPL companies. Affirm’s shares dropped a whopping 11%, whereas Afterpay, Zip, and Sezzle shares by 8%, 6%, 10% respectively.

It was last year when the craze around BNPL really caught some momentum. Turbo-charged on the back of pandemic’s economic difficulties, the idea turned into a full-blown phenomenon, as people started craving for some leeway around their purchases. The new and highly-accessible structure of availing credit saw the financial landscape reshape in a way, which set the stage for a whole new generation of fintech companies to enter the picture. In fact, after observing the customers’ growing inclination towards the BPNL feature, many old heads like PayPal and Block also jumped on the bandwagon. However, with growing mishaps, the future of the service remains under wraps.

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