|
| 1 | +# Buy Now, Pay Later |
| 2 | + |
| 3 | +## Problem Statement |
| 4 | + |
| 5 | +People exchange money for goods and/or services. |
| 6 | + |
| 7 | +Some of these purchases are non-essential. This means that they are, |
| 8 | +strictly speaking, optional. Ordering extra guacamole at a restraunt, |
| 9 | +buying a brand new pair of shoes, and buying a diamond ring are all |
| 10 | +examples of non-essential spending. |
| 11 | + |
| 12 | +Other purchases are essential. If you are having a heart attack (within |
| 13 | +the United States) medical care is a mandatory expense. You either make that |
| 14 | +purchase or you die. If one does not have some minimum level of food, water, and shelter |
| 15 | +those are also essential expenses. |
| 16 | + |
| 17 | +It comes down to needs and wants. If you need to have something that is an essential purchase. |
| 18 | +If you want to have something that is a non-essential purchase. |
| 19 | + |
| 20 | +Many people do not have enough money for their essential expenses. |
| 21 | +This can be due to any number of reasons, but in the United States minimum wage has |
| 22 | +not kept up with overall inflation since 1968. Add to that rising costs of housing, |
| 23 | +transportation, education, etc. and people's financial |
| 24 | + |
| 25 | +Some people have much more money than they could ever need. These people, |
| 26 | +sometimes pooling funds via corporations, often choose to loan this money |
| 27 | +to those that do not have enough for their expenses. |
| 28 | + |
| 29 | +The reason they do this is because they can charge fees. If someone can't afford |
| 30 | +a particular expense of ~$100 they can get the money for that expense right away in exchange for agreeing |
| 31 | +to say a 2% interest rate. This would mean that the amount they owe goes up by 2% every month or so that they |
| 32 | +do not pay the loan issuer back. |
| 33 | + |
| 34 | +Banks work this way. You deposit money in the bank and, while the bank and the government |
| 35 | +guarentee you that you can go at any time and get your money out, they are also turning around |
| 36 | +and lending that money to any number of businesses and individuals. |
| 37 | + |
| 38 | +So long as you assume most people will be able to eventually pay off their debts being a loan issuer |
| 39 | +is a very profitable business to be in. It is also something of a public good.[^christmas] But if a large number of people are unable to pay off their debts |
| 40 | +you can get financial collapses. This can be at the level of an indidual loan issuer or entire countries. |
| 41 | + |
| 42 | +Because it is bad when this happens governments generally have laws that restrict the "level of risk" |
| 43 | +loan issuers are allowed to take on. If they "take on too much risk" - meaning loan enough money |
| 44 | +to people who aren't able to pay it back - there will eventually be a collapse. |
| 45 | + |
| 46 | +The level of scrutiny that applies to normal debts does not seem to, at least in the United States, |
| 47 | +apply when you do it via payment plans and call it "Buy Now, Pay Later." This allows for businesses |
| 48 | +to make loans they otherwise wouldn't be allowed to to people that might not otherwise qualify. |
| 49 | + |
| 50 | +This certainly helps people who are struggling to get enough to affort their essential expenses. |
| 51 | +It can also help people make non-essential expenses which they deem essential. Human's are imperfect |
| 52 | +creatures. Many will take on a payment plan with an interest rate for a burrito. |
| 53 | + |
| 54 | +In all cases the ability to take on debt can either help someone stabilize their financial situation |
| 55 | +or it can ultimately make things worse. The higher the interest rate the more likely the second situation |
| 56 | +comes to pass. |
| 57 | + |
| 58 | +In the modern world computers are required to track both the issuance of these debts as |
| 59 | +well as compute interest and facilitate the collection process. This is in part because payments |
| 60 | +are often made electronically but also in part because the overhead of paying a person |
| 61 | +to manually keep track of all this info would eat in to the profits from interest and flat fees. |
| 62 | + |
| 63 | +"Buy Now, Pay Later" programs also want to be embedded into online storefronts. People are much more likely |
| 64 | +to accept higher interest rates or take on the debt at all the closer the offer is made to "the point of sale." This requires not only business deals but a non-trivial amount of code. |
| 65 | + |
| 66 | +## Your Goal |
| 67 | + |
| 68 | +Never make a program for this. |
| 69 | + |
| 70 | +"Buy Now, Pay Later" is another word for debt. If you make a program that |
| 71 | +enables desperate people go deeper and deeper into debt to enrich yourself |
| 72 | +you are a scumbag. |
| 73 | + |
| 74 | +I put this "project" here to tell you that building software is not |
| 75 | +a neutral act. You need to critically consider how what you decide to spend |
| 76 | +your time on will affect the world around you. |
| 77 | + |
| 78 | +Facebook is one of the largest websites in the world. It makes a lot of |
| 79 | +people a lot of money. The world would be a better place |
| 80 | +if it did not exist. |
| 81 | + |
| 82 | +There are real companies - at the time of writing the biggest one is called [Klarna](https://klarna.com/) - |
| 83 | +which are more than happy to offer loans to the desperate and short-sighted. Their existence makes the |
| 84 | +world a worse place and they could not exist without the efforts of people who write software. |
| 85 | + |
| 86 | +## Future Goals |
| 87 | + |
| 88 | +None. |
| 89 | + |
| 90 | +[^christmas]: Watch "It's A Wonderful Life" sometimes. Banking is not intrinsically evil. Loaning people |
| 91 | +money so they can buy a home to live in can be a great thing. |
0 commit comments