The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
A top US banking regulator on Wednesday warned banks to manage the risks to consumers posed by increasingly popular “buy now, pay later” financing for retail spending, saying the service creates pitfalls for retail shoppers.
As the year-end holidays approach, the statement from the US Office of the Comptroller of the Currency, an independent arm of the US Treasury, was the latest sign that federal regulators are scrutinising the increasingly popular form of consumer credit.
The loans allow borrowers to pay off a purchase in four or fewer interest-free instalments but regulators warn they can lead to trouble, leaving unsuspecting borrowers overextended.
“As the ‘buy now, pay later’ market grows and we enter the holiday shopping season, the guidance confirms our expectation that OCC-supervised institutions offering these products do so in a responsible manner,” Michael Hsu, acting Comptroller of the Currency, said in a statement.
Consumers with fewer dollars to spend are increasingly turning to “buy now, pay later” loans, with a record number borrowing nearly $1 billion this way during the annual Cyber Monday shopping spree alone, analysts say. The surge in business has boosted shares in “buy now, pay later” company Affirm.
By Douglas Gillison
Learn more:
Is Fashion’s Buy-Now, Pay-Later Boom Over?
Instalment payment services helped fuel sales for years. But high interest rates could soon have shoppers pulling back.
All three companies have embraced a busy, garish design that’s popular in China and ideally calibrated to sell plenty of low-cost products. Will the same be true as these companies attempt to move upmarket?
The South Korean e-commerce firm Coupang has saved Farfetch from potential bankruptcy, and could use its logistical and marketing might to solve some of the luxury e-tailer’s seemingly intractable problems. But “everything stores” have a spotty track record when it comes to high-end retail.
Return rates are set to soar this holiday, despite slower sales growth, putting brands’ returns management playbooks to the ultimate test.
The deal provides the online luxury giant with $500 million in emergency funding. A complex transaction that would have seen Farfetch acquire a 47.5 percent stake in Yoox-Net-a-Porter from Richemont is dead.