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Capital One halts buy-now-pay-later credit card transactions

December 7, 2020

Buy-now-pay-later platforms have gained traction over the past decade, as startups such as Affirm, Afterpay and Klarna have appealed to millennial and Generation Z consumers with a model that allows them to pay for purchases in installments without the hefty interest that comes with credit cards.

Rather than passing the interest on to consumers, buy-now-pay-later companies charge merchants a commission for offering the option — luring them with the prospect that shoppers will make larger purchases (by up to 20%, according to data from PayPal and Afterpay) if an installment plan is available.

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