For the free (no-interest) versions, it’s a bullshit legal loophole in the US credit laws, or at least it was a few years ago. May have been more strongly codified since, though I bet almost nobody who could close it realizes the gap is there. The whole scheme is out of Australia, but I have no idea what their legal setup is.
The US requirements are basically:
You can’t charge fees to host the plan
You can’t charge % late fees, only fixed
You can’t have more than 4 installments, meaning no more than 5 payments if you include an optional down payment
You must not deny customers for means-based items, or using credit data. You can give them an effectively meaningless approval value though.
You as a customer pay late fees if you miss a payment, but they make most of their money by charging the merchant a higher transaction fee. So, it’s theoretically free for the customer, meaning it can fit into the loophole. Legally it isn’t a credit product.
The TL;DR is “because the law is full of holes and bullshit, and if it’s making people money then it’s not likely to change”
For the free (no-interest) versions, it’s a bullshit legal loophole in the US credit laws, or at least it was a few years ago. May have been more strongly codified since, though I bet almost nobody who could close it realizes the gap is there. The whole scheme is out of Australia, but I have no idea what their legal setup is.
The US requirements are basically:
You as a customer pay late fees if you miss a payment, but they make most of their money by charging the merchant a higher transaction fee. So, it’s theoretically free for the customer, meaning it can fit into the loophole. Legally it isn’t a credit product.
The TL;DR is “because the law is full of holes and bullshit, and if it’s making people money then it’s not likely to change”