As Coachella’s ticket sales surge, a new trend is taking center stage: the rise of flexible payment options. With nearly 60% of attendees opting for buy now, pay later plans, experts warn that more flexibility can lead to overspending and financial risks.
The Rise of Buy Now, Pay Later: A Growing Concern at Coachella and Beyond
Coachella, one of the most sought-after music festivals in the US, has seen a significant increase in attendees using payment plans to acquire tickets. According to Billboard, a whopping 60 percent of this year’s attendees opted for payment plans, which start at $599 for a three-day pass.
Coachella is a two-weekend music festival held annually in Indio, California.
Founded in 1999 by Paul Tollett and Rick Van Santen, the event has grown to become one of the most popular music festivals globally.
Coachella features a diverse lineup of artists from various genres, including rock, pop, hip-hop, and electronic dance music.
The festival attracts over 125,000 attendees per weekend, with ticket prices ranging from $400 to over $1,000.
Coachella is known for its unique setting, with the Empire Polo Club serving as the backdrop for the event.
The Evolution of Buy Now, Pay Later Plans
Payment plans are not new to Coachella or other festivals like Lollapalooza and Rolling Loud. However, the ‘buy now, pay later’ (BNPL) plans have become increasingly ubiquitous in recent years. The festival’s system, which requires an additional $41 flat fee to use, cancels orders if scheduled payments are missed and issues credits that can be used for next year’s edition.
While BNPL providers like Klarna and Affirm may charge interest to those who fail to make payments on time, the festival’s system is designed to be more flexible. However, experts warn that this type of plan still isn’t risk-free. ‘The issue is that more flexibility also gives more opportunities to overspend,’ says Wesley Yin, a professor of economics at the University of California, Los Angeles.
A Growing Industry with Risks
BNPL plans have become increasingly popular across various sectors of the consumer industry. Nearly $34 billion worth of loans originated from the industry in 2022, according to the Consumer Financial Protection Bureau. This represents a significant increase from $24 billion in 2021 and an even sharper jump from around $2 billion in 2019.
The BNPL industry has experienced significant growth in recent years, with global transaction values projected to reach $7.3 trillion by 2026.
This shift towards flexible payment options is driven by changing consumer behavior and increasing demand for financial inclusivity.
Key players like Affirm, Afterpay, and Klarna have led the charge, offering interest-free or low-interest installment plans for online purchases.
As a result, BNPL has become an essential component of e-commerce strategies worldwide.
The BNPL industry has also expanded into seemingly mundane purchases, such as ordering food online. Klarna‘s partnership with DoorDash is just one example of how these plans are being applied to everyday transactions. However, experts warn that this can lead to a ‘stacking‘ of loans, making it difficult for consumers to track their finances.
A Broader Trend: Relying on Financial Products for Short-Term Pleasure
While BNPL plans may not be inherently bad financial choices, relying on them for short-term purchases is when risks start to emerge. Sean Pyles, host of NerdWallet’s Smart Money podcast and a certified financial planner, notes that consumers are increasingly relying on new financial products to ‘just enjoy the moment‘ without thinking about the long-term consequences.
As the BNPL industry continues to grow, it’s essential for consumers to be aware of the potential risks and to use these plans responsibly. By understanding the terms and conditions of payment plans and making informed decisions about their finances, consumers can avoid getting caught up in a cycle of debt that can have serious consequences down the road.
- observer.com | “Buy Now, Pay Later” Is Taking Over Coachella (and DoorDash)
