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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (78554)	11/19/2025 10:50:23 AM
From: Sean Collett	1 Recommendation Recommended By E_K_S Read Replies (1) \| Respond to of 78751

RE: PYPL I am sure when buying great DD is done! Private credit right now seems to be full of it. The issue here is Paypal is able to move any credit losses to someone else who's buying the BNPL loans. If credit tightens and they can't originate and sell then the risk stays on their balance sheet. So a model that looks good today may not be good tomorrow. -Sean

To: Madharry who wrote (78554)	11/19/2025 10:54:18 AM
From: E_K_S	1 Recommendation Recommended By Lance Bredvold Respond to of 78751

PYPL vs Other BNPL PayPal's Buy Now Pay Later (BNPL) service, known as "Pay in 4," allows consumers to make purchases and pay in interest-free installments. PayPal manages credit risk and liquidity by selling BNPL loan receivables to KKR, a financial partner. KKR uses advanced data analytics and pricing models to evaluate and manage the loan portfolios. This agreement enables PayPal to free up capital and scale loan volume while KKR assumes credit risk on the loans they purchase. PayPal reportedly absorbs some initial losses on BNPL loans but gains overall from increased transaction volume and merchant fees, offsetting credit losses.? Other BNPL companies typically monitor customer limits and risk daily using fraud detection systems, payment behavior analytics, and account protection tools to manage credit risk and prevent losses. Tools like Kount provide fraud prevention, chargeback management, and unusual activity monitoring, helping BNPL providers cut off accounts or restrict credit limits dynamically. The BNPL market uses ongoing risk evaluations, automated credit limits, and dispute resolution processes to control losses.? Regarding losses, PayPal’s model is seen as conservative, focusing on underwriting customers well and leveraging its extensive user base. Losses may exist but are managed by offloading loans to KKR. Other BNPL providers, especially smaller firms, may face higher losses due to looser underwriting, but detailed comparative loss data is scarce publicly. Larger BNPL companies with stronger data analytics and capital partners tend to manage risk better. This list reflects companies with significant revenue, transaction volume, and user adoption in BNPL payment services in 2025.? In summary, PayPal manages BNPL losses by selling loans to KKR, which uses data analytics for risk pricing and loan portfolio management, enabling PayPal to scale volume while controlling credit risk. Other BNPL players rely on fraud prevention and daily risk monitoring to manage loss exposure. PayPal's approach with KKR is a notable solution in the sector blending financing and technology. The BNPL market is led by Mastercard, PayPal, Block, Klarna, and Affirm by revenue and transactions. This addresses the BNPL mechanisms, loss management, KKR’s role, comparative industry practices, and top BNPL companies by 2025 ------------------------------------------------------------- The amount that PYPL sells to KKR is pretty high for their volume of sales.

To: Madharry who wrote (78554)	11/19/2025 10:58:41 AM
From: E_K_S	1 Recommendation Recommended By Lance Bredvold Respond to of 78751

More on PYPL losses on BNPY compared to Top 5 In 2025, PayPal’s renewed agreement with KKR authorizes the sale of up to €65 billion (about $75.4 billion USD) in BNPL loan receivables originated in major European markets through March 2028, with a replenishing loan commitment of up to €6 billion at any given time. This marks one of the largest off-balance-sheet management moves among BNPL lenders, allowing PayPal to transfer nearly all credit risk and capital needs for this substantial portfolio to KKR. These values represent the notional amount of receivables transferred; actual charge-offs (the "losses" ultimately absorbed by investors, including KKR) are not explicitly disclosed by PayPal or KKR, but this transfer structure is considered an industry-leading risk management move for a payment processor.? Comparison to Other Top BNPL Providers PayPal: Up to $75.4 billion in receivables managed through KKR; loss data not reported separately but managed largely off PayPal's balance sheet post-sale. Mastercard (Installments), Block, Inc. (Cash App/Afterpay), Klarna, and Affirm: These firms either retain receivables or securitize portions through capital markets, but none reported a single partner transaction of this magnitude. Loss rates vary: Industry averages for BNPL losses ("net charge-offs") range from 3% to 6% of receivables annually. Klarna and Affirm, for example, have reported net charge-off rates of 4–7% for 2024–2025, with outstanding BNPL loan books usually in the $3–15 billion range, much smaller than the notional receivables serviced by PayPal/KKR.? Mastercard, as a network/provider, does not assume receivable risk directly and is not comparable on credit loss management. Table: 2025 BNPL Receivable Transfers/Loss Management This means PayPal is offloading a notional BNPL volume unmatched by peers, and while specific net "losses sold" are not disclosed, its model keeps risk transfer at scale well above any other BNPL provider in 2025 ------------------------------------------------- Not sure off loading BNPL by PYPL is the best strategy