Payments

Financially stressed consumers nearing their credit limit use buy now/pay later loans to finance smaller purchases, while wealthier households want to avoid paying interest or carrying a balance on credit cards for bigger-ticket items, according to the New York Fed.

Shared services organizations PSCU and Co-op Solutions are offering post-purchase buy now/pay later loans, with the goal of reaching consumers who are concerned about managing their credit.

The stable outlook is an indication that — at least for some lenders — the much-feared cycle of cardholders defaulting on their obligations in the wake of the COVID-19 pandemic may not turn out to be so bad.

The collateral has a high principal payment rate, 63.1%, for the eleven months ended November 2023. It also had payment rates of 66.7% and 59.0% for the twelve-month averages for 2022 and 2021, respectively.

The AAA ratings also stem from a 5.5% base-case loss rate, a 22.5% base-case payment rate, a 15.0% base-case yield, and a 3.0% purchase rate assumption.

In comments submitted to the Consumer Financial Protection Bureau concerning its "large participant" rule governing Big Tech in payments, many commenters outlined procedural concerns, suggesting there may be grounds for litigation when the rule is finalized.

Despite tougher economic conditions, BNPL lenders are driving growth by expanding to new audiences and checkout channels, as well as fine-tuning proprietary risk-management models.

The A1 and A2 notes have a revolving period during which investors will receive fixed-rate and floating-rate payments, respectively.

A tightening economy plus an aggressive start to fourth quarter shopping will put firms' underwriting decisions under the microscope as regulators' concerns mount.

The collateral pool had an average account balance of $1,620, lower than that of credit card securitization trusts that the Big Six banks sponsor, and the ABS notes benefit a 26% subordination level.

As U.S. credit card balances continue to march above $1 trillion, the number of newly delinquent credit card users now exceeds the pre-pandemic average and millennials and those with student or auto loans are driving the increase in past-due payments, the New York Fed said.

On average the receivables have a balance of $971, a WA average percentage rate of 32.88%, and a WA age of 24 months. Also, cardholders might pay an annual membership of up to $75.

The Swedish furniture giant debuts a modest U.S. buy now/pay later loan program via Afterpay, with interest-free terms that are unlikely to anger regulators.

Consumer ABS adapts to an environment where total U.S. household debt reaches a record high of $17.06 trillion, while observers say credit performances could reach pre-pandemic levels by 2024.

Total credit enhancement on the notes amounts to 13.50% and 7.00% on the senior and subordinate classes of notes, respectively.

Synchrony has a lower credit quality than most other bank sponsors of credit card securitization trusts in the U.S., but the average account balance is lower, too.

In the April 2023 collection period, 60 days-plus net chargeoffs and delinquencies of rose to 2.91% and 1.26%, respectively.

The company says young consumers, steady credit quality and a robust travel recovery will offset a weaker economy for small businesses.

Discover Financial Services' stock tumbled after revealing a new FDIC consent order regarding consumer compliance. Separately, the financial institution also copped to misclassifying certain credit card accounts into its highest merchant-pricing tier beginning in 2007.

The Federal Reserve's instant-payments rail may cut into card issuers' credit and debit card volume over time, but it could also help smaller institutions expand their services.