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FirstFT: ‘Buy now, pay later’ retail loan services test patience of investors


World updates

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Old-fashioned store credit has an app interface and a Gen-Z-friendly name. “Buy now, pay later” services allow consumers to pay for purchases over time while driving new traffic for merchants.

The question is how the fintech businesses will make money for themselves. As the red-hot BNPL sector signs deals with retailers, it is also reporting losses. Some customers are behind on their loans.

Last week, the BNPL company Affirm announced a partnership with Amazon in which the online retailer’s customers will be able to pay for products in monthly instalments using Affirm’s network.

The Amazon deal was a “massive customer expansion opportunity” for Affirm, said Dan Dolev, an analyst at Mizuho. He surveyed 200 Amazon customers and found that roughly half said they would be likely to use Affirm to make orders on Amazon, up from the 18 per cent who said they had already used BNPL. Still, he predicted that the company was still years away from profitability.

Thanks for reading FirstFT Americas. Have a great weekend. — Wai Kwen

Five more stories in the news

1. Renaissance executives to pay $7bn in back taxes Top executives and their spouses agreed to pay back taxes and penalties to federal authorities in connection with trades made by the quantitative hedge fund in the largest tax settlement in US history, according to people briefed on the matter.

2. Inside the huge effort to fly Afghans to the US on commercial jets The US military evacuated or facilitated the evacuation of about 124,000 people out of Kabul before withdrawing American troops by August 31. The Pentagon’s need for planes came as the airline industry continues to recover from the financial and operational devastation wrought by the pandemic. Read the rest of our Afghanistan coverage on FT.com.

  • Mohsin Hamid on Afghanistan — and the case against wars As the latest calamitous foreign intervention ends, the Lahore-based novelist warns against a pivot to a new conflict.

“The end of a war ought not to be a time to adjust our focus to the next war. The end of a war ought to be a time to focus on peace.”

3. US corporate debt binge Bankers and investors are bracing for a bumper month of debt issuance, with pent-up supply set to be unleashed after the Labour day holiday. Some market participants forecast a frenetic pace of deals that could rival the depths of last year’s pandemic shock, when companies grasped for cash to survive.

4. Japanese PM Yoshihide Suga to resign Yoshihide Suga announced today that he will step down as Japan’s prime minister after only a year in office, during which his popularity plummeted as he struggled to contain Covid-19.

  • Opinion: Suga’s abrupt exit threatens return of volatility to Japanese politics, writes Robin Harding.

5. Corporate America declines to comment on Texas abortion ban Many of the large US companies that have spoken out on everything from voting rights and racial equality to transgender recognition in recent years are so far dodging the polarising debate over abortion as some of the country’s tightest restrictions go into effect in Texas.

Demonstrators protest against the abortion ban in Texas at the state Capitol in Austin
Demonstrators protest against the abortion ban in Texas at the state Capitol in Austin © AP

Coronavirus digest

  • Opinion: As Europe and the US stride on with Covid vaccinations, global divides are opening. One is with lower-income countries where a shortage of vaccines persists. The other is between western countries that are living with coronavirus, and many Asia-Pacific nations that are still focused on suppressing it.

  • The US economy is expected to post another solid month of job gains, in a sign that the more contagious Delta coronavirus variant is having a limited effect on hiring plans and worker shortages are continuing to ease.

  • The European Commission has ended an acrimonious court dispute with AstraZeneca over delayed Covid-19 vaccines, dropping an attempt to levy billions of euros in penalties on the UK drugmaker.

  • Follow our live coronavirus blog and sign up to our Coronavirus Business Update email for a regular briefing on how the pandemic is affecting markets, global business and our workplaces.

The day ahead

Economic data Wall Street stocks ticked higher a day ahead of the US employment report for August, which is expected to show that non-farm payrolls rose 750,000. Eurostat retail trade figures are also out, as are IHS/Markit services PMIs from China, France, Germany, India, Italy, Japan, the UK and the US.

Biden visits Ida-hit New Orleans Joe Biden will travel to Louisiana as it recovers from Hurricane Ida, which slammed into the Gulf Coast at the weekend. On the east coast, at least 45 people died in flash floods after the weakened storm dumped record-breaking rainfall on the region. (CNN, FT)

The FT Weekend’s live festival is on September 4, in London. For more inspiring conversations, in-depth storytelling, a bit of escapism and a lot of fundon’t miss our new FT Weekend podcast, hosted by Lilah Raptopoulos.

What else we’re reading

Russia sows seeds of ‘wheat diplomacy’ Russia is slowly making its way across Eurasia, Africa and Latin America as an agricultural export powerhouse as it looks to reduce its reliance on oil and extend its global diplomatic reach. Some anticipate Russian grain could become the Kremlin’s new oil.

  • Video: Can new lenders save Brazil’s struggling farmers? High interest rates, an outdated, overcomplicated credit system and a lack of bank branches in rural areas have led to a loans crisis for those most in need.

How not to waste your life Most approaches to time management, not to mention most allegedly time-saving technologies, make things worse. They pitch us into a futile struggle to deny the truth of our limitations and avoid the discomfort of staring our finitude in the face. So, how should we spend the time we have, asks Oliver Burkeman.

Oliver Burkeman: ‘A truly practical approach to making the best use of time demands that we stop trying to deny the undeniable’
Oliver Burkeman: ‘A truly practical approach to making the best use of time demands that we stop trying to deny the undeniable’ © Lucas Varela

Bridgepoint went public. Executive rewards stayed private The regular disclosure of US private equity executives’ income, which dwarfs that of most business leaders, often causes a fuss. They can now look with envy at Bridgepoint, which despite listing in London has kept top executives’ rewards hidden from view. Helen Thomas argues that the private equity group’s carried interest disclosure reveals flaws in the UK’s rules.

The start-ups trying to kill the password The average person has to remember between 70 and 80 passwords. As a result, the race to replace the password is under way, with biometric security emerging as a sought-after solution. The greatest obstacle, however, is changing habits.

Putting yourself in someone else’s shoes The “curse of knowledge” is used to describe how hard it is for a well-informed person to appreciate the depth of someone else’s ignorance. It is the nature of why we often fail to appreciate how necessary checking is — and why Tim Harford’s latest column has been read by numerous editors before reaching you.

Visual arts

Calida Rawles, the LA-based painter, talks about how her hyper-realistic work reflects and challenges society’s ideas about black lives.

‘The Space In Which We Travel’ (2019)
‘The Space In Which We Travel’ (2019) © Lehmann Maupin

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