Jeremy, appreciate the great write-up on BNPL. One thing that has always gnawed on my mind is the extreme regulatory risk that comes with BNPL essentially existing due to what some may term a 'regulatory loophole'. To have the law consider > 4 payments vs <=4 payments as separate products seems arbitrary and ripe for regulatory bodies to close that loophole swiftly, which would have dealt a body blow to BNPL if it happened at the nascent stages.

How can companies, starting out with that kind of framework, then mitigate and navigate those kind of challenges where it is essentially out of their hands to manage?

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Thanks for an insightful article. We are exploring a Travel-now-pay-later in an emerging country. I had a few Risk-related Qs if you can guide.

1. While we would want a risk score that is built on the first loan, does it help to build another score on long-term horizon on BNPL and use it in conjunction?

2. Is the Credit Line offer on BNPL, only for the least risky on day-1? For the rest, is it like an Up-sell once we have identified low risk customers through time?

3. When you say Line, do you still keep the ability to decline a purchase even if there is availability? Wouldn’t the customer react negatively to it?

Thanks for the discussion and look forward to hearing from you

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Great insights on BNPL, will be interesting to see how Apple's entry in this space will change the perception of investors.

In between I am helping a fintech in the payments space and it will be good to connect with you. Please share an email address so I could drop you a note.

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Great insight Jeremy. Re venture investing in credit being a death trap, do you think there a certain magic percentage of revenue that financial service tech company can still derive from lending, but not being perceived by investors as a lending biz?

Maybe 20%? 40%?

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Well done! "From a venture perspective, investing in lending businesses is a death trap. And this is coming from someone who built his career in balance sheet-heavy models (SoFi, Lending Club, Affirm, Aven). Capital intensivity is unavoidable. Balance sheet-lite does not exist; those who claim they’ve outsourced all capital needs are likely to fail at the first hiccup. So why even look at it? Truly differentiated business models can generate outsized returns, but these businesses are true outliers, functioning as category-reinventing or category-defining efforts. I look forward to helping support the next generation of credit, but not likely the next BNPL offering!"

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