Axios Pro: Fintech Deals

September 15, 2022

Axios Pro Exclusive Content

It's Thursday, fintech friends!

Situational awareness: The Merge is complete, and the ethereum blockchain has officially switched to proof-of-stake. Axios' Brady Dale explains why The Merge was the second-biggest event in crypto this year.

1 big thing: "Buy now, pay later" faces regulation

Illustration of an iPhone displaying the time "$$:$$" and an alarm snooze button.

Illustration: Allie Carl/Axios

The Consumer Financial Protection Bureau is planning to regulate "buy now, pay later" lenders the same as it does credit card companies, and it is looking into limiting how personal data is used by such businesses, the agency said on Thursday.

Why it matters: Firms in the BNPL space are facing regulation both as financial companies and as a tech businesses. How the CFPB decides to further regulate the space will have implications for all companies offering fintech apps and services.

Driving the news: In its anticipated report, the CFPB said that the data obtained by the BNPL companies could threaten consumer privacy. BNPLs currently lack the more stringent consumer protections standards that apply to credit card companies.

  • The report collated data from Affirm, Afterpay, Klarna, PayPal and Zip.
  • "We’ve asked that staff identify surveillance practices that may need to be curtailed in some way ... outside of lending itself," a CFPB official said during a call with members of the press. "Our concern with data in general is that, once the company has that data, there's no knowing where the line could be drawn and what they could do with it."
  • The latter point is especially notable as BNPL investors have often touted their company's wealth of data as a reason to be bullish on the category.

Of note: This will be one to watch both for the credit card companies that have jumped into BNPL and for tech giants such as Apple expanding into the space.

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