Core Insights - Consumers have consistently predicted economic trends more accurately than experts, indicating a disconnect between traditional economic models and actual consumer behavior [2][5][47] - The upcoming PYMNTS Consumer Expectations Index (PCEI) aims to address the gaps in measuring consumer sentiment that traditional methods fail to capture [26][30] Consumer Behavior and Sentiment - Consumers have shown a tendency to prioritize essential expenses over discretionary spending, with 68% of American households living paycheck to paycheck [7][20] - Traditional sentiment measures do not account for the long-term impact of inflation, leading to a persistent feeling of financial stress among consumers despite macroeconomic indicators suggesting recovery [11][14] - The relationship between income and spending behavior has weakened, with many high-income earners also reporting living paycheck to paycheck due to fixed obligations and debt [17][18] Structural Gaps in Economic Measurement - The original methodology for measuring consumer sentiment is outdated, failing to capture the complexities of modern financial lives [10][48] - Three key blind spots identified include: 1. The permanent damage from inflation, which has not returned to pre-2021 levels [11][12] 2. The unreliable correlation between income and spending behavior due to varying financial structures [15][19] 3. The distinction between employment rates and job security, which affects consumer spending decisions [21][23] PYMNTS Consumer Expectations Index (PCEI) - The PCEI will launch in March 2026, designed to provide a more nuanced understanding of consumer sentiment by incorporating structural constraints such as debt manageability and savings capacity [27][30] - The index will measure consumer sentiment across 11 dimensions, aiming to reflect both feelings and the ability to act on those feelings [29][30] Recent Data Insights - February's PCEI data indicates cautious optimism among consumers, with a score of 51.5, but reveals significant disparities based on financial stability and generational differences [32][37] - Job security perceptions show a high score of 83.5, but confidence in finding comparable work drops to 48.0, highlighting a gap between perceived security and actual job market conditions [41][42] - Consumers are managing debt and maintaining employment but are doing so with caution, indicating a fragile financial foundation [46][48]

Core Insights - Sezzle is accelerating its super app plans for 2026 due to increased engagement with its offerings in 2025 [1] Financial Performance - In Q4, Sezzle's gross merchandise value (GMV) rose by 35.3% year over year, reaching a quarterly high of $1.2 billion [2] - The company added 134,000 new Monthly On-Demand and Subscribers, totaling 918,000 [4] Strategic Focus - Growth is attributed to a focus on higher lifetime value (LTV) subscribers, targeted marketing, and new shopping features [3] - The app's enhancements in 2025 included Price Comparison, Browser Extension, Express Checkout, Earn Tab, Wishlist, Products Tab, and Sezzle Balance [8] Future Plans - Sezzle aims to integrate shopping, flexible payments, and essential services into an all-in-one app [9] - The 2026 product roadmap includes an AI-powered shopping assistant, Sezzle Mobile wireless service, enhanced long-term lending, and a receipt scanning and rewards feature [10] User Engagement - Monthly app sessions increased by 51% year over year, indicating growing user engagement [4] - The app's expanding financial tools are designed to enhance consumer LTV and drive acquisition [11]

This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Dive Brief: Pay With Spire, a pay-by-bank provider offering merchants lower payments costs, on Thursday announced it has hired a former Fiserv executive, Jennifer LaClair, as its new chief executive. LaClair, who was Fiserv’s head of merchant solutions until December, said in an interview Wednesday that Spire sits “at an inflection point” in its growth as mercha ...

Group 1 - Affirm is applying for a bank charter in Nevada to establish Affirm Bank, which will be a Nevada-chartered industrial loan company [9] - The establishment of a banking subsidiary is expected to strengthen and diversify Affirm's platform, allowing the company to introduce new financial products and services over time [4][3] - Affirm currently offers services like a debit card and buy now, pay later (BNPL) financing, and collaborates with banks such as Cross River Bank and Celtic Bank for its lending services [5] Group 2 - The move into banking is part of a broader trend among fintech companies, with competitors like Klarna and PayPal also seeking to enter the banking space [6][7] - Klarna has positioned itself as a "global digital bank" and has introduced deposit accounts and its own debit card [6] - The application for a bank charter by Affirm reflects a growing interest among BNPL firms to expand their service offerings beyond traditional lending [3][9]

Group 1 - Consumers accrued a record $10 billion in purchases using buy now, pay later (BNPL) plans in November, with $1 billion spent on Cyber Monday alone [1] - Approximately half of Americans have utilized BNPL services for various purchases, indicating widespread adoption [1] - The total BNPL debt is difficult to quantify as lenders are not required to report to credit bureaus, leading to a largely invisible debt landscape [2] Group 2 - In 2023, Americans spent over $116 billion through BNPL plans, a significant increase from $2 billion in 2019, highlighting rapid growth in the sector [3] - BNPL companies generate revenue primarily through transaction fees charged to merchants, with Klarna achieving a valuation of $15 billion upon its NYSE debut and reporting $903 million in revenue, a 26% increase year-over-year [3] - Borrowers can access credit lines up to $20,000 without a credit report, allowing them to significantly increase their purchasing power by using multiple BNPL services simultaneously [4] Group 3 - BNPL lenders are not subject to the same regulations as traditional credit products, such as the CARD Act and the Truth in Lending Act, which could lead to consumer risks [5] - Although typical BNPL plans last four to six weeks, they can extend much longer, and regulatory scrutiny has been limited, with past investigations failing to impose stricter regulations [5] - FICO plans to include BNPL debts in credit histories, which may impact consumer behavior regarding installment plans, although the method of data collection remains unclear [5]

Core Insights - Klarna Group has positioned itself as a leading player in the buy now, pay later (BNPL) fintech sector, despite experiencing a stock market decline of over 30% since its September IPO [1] - The overall performance of BNPL stocks, including Sezzle, has been weak, with Sezzle down approximately 20% since Klarna's IPO and over 40% at its October low [2] - Patient investors may find potential in Klarna as it is expected to outperform the S&P 500 in the coming year due to several favorable factors [2] Demand and Growth - The Klarna Card, launched in the U.S. on July 4, has seen rapid adoption, achieving over 1 million sign-ups in its first 11 weeks and reaching 4 million sign-ups within four months [4] - Klarna reported a 28% year-over-year revenue increase, with U.S. revenue surging by 51%, largely driven by the success of the Klarna Card [5] - The card has gained acceptance among over 850,000 retailers, enhancing accessibility to BNPL services and expected to continue driving growth into 2026 and beyond [6] User Base Expansion - Klarna's user base has expanded significantly, with 27 million new users added in the latest quarter, bringing the total to 114 million active users globally [9] - The growth in user numbers and the popularity of the Klarna Card indicate a rising demand for BNPL services, countering criticisms regarding the sustainability of such financial products [8]

Group 1 - Zip has received significant equity investments, including $100 million from U.S. investors in 2023 [3] - The company reported a 32.8% increase in total income to $321.5 million and a 38.7% rise in total transaction volume to $3.9 billion in the fiscal first quarter [4] - The number of merchants and active customers grew by 9.1% and 5.3%, respectively, while Zip's competitors include Klarna Group, Sezzle, and Affirm Holdings [5] Group 2 - Zip has secured a warehouse facility of approximately $283 million from Victory Park Capital to support its U.S. BNPL receivables [8] - This funding will enable Zip to expand its business and maintain a strong balance sheet while capitalizing on growth opportunities in the U.S. market [8] - The company aims to broaden its BNPL services beyond fashion and high-end items to include everyday purchases from merchants like Valvoline and Best Buy [6]

Core Viewpoint - PayPal has submitted an application to become a bank, aiming to enhance its ability to provide commercial loan solutions to small businesses in the U.S. and reduce reliance on third-party institutions [1][3]. Group 1: Company Initiatives - PayPal Holdings, Inc. announced its application to establish a Utah-chartered Industrial Loan Company (ILC) named "PayPal Bank" [1]. - The establishment of PayPal Bank is expected to improve operational efficiency and strengthen PayPal's business capabilities, particularly in supporting small business growth [3]. - PayPal has provided over $30 billion in loans and working capital to more than 420,000 business accounts globally since 2013, addressing funding gaps for small businesses [3]. Group 2: Services Offered - In addition to small business loan solutions, PayPal Bank plans to offer interest-bearing savings accounts to customers [3]. - PayPal Bank aims to directly join U.S. card organizations to complement its payment processing and settlement services conducted through existing banking relationships [3]. Group 3: Regulatory Environment - The application for a banking license comes amid a trend of increased applications for bank charters in the U.S. due to a more favorable regulatory environment since the beginning of the Trump administration [3]. - Recent approvals by the Office of the Comptroller of the Currency (OCC) for cryptocurrency companies like Ripple and Circle to establish national trust banks may further integrate digital assets into the banking system [3].

Market Overview - US stocks ended on a mixed note, with the S&P 500 and Dow falling for the third consecutive session, while the Nasdaq Composite gained slightly [2][15] - The S&P 500 closed at 6,800.26, down 0.24%, and the Dow Jones Industrial Average finished at 48,114.26, down 302.30 points or 0.62% [2][15] - The Nasdaq Composite rose 0.23% to end at 23,111.46 [2][15] Labor Market Data - The November jobs report indicated that the US economy added 64,000 jobs, surpassing economists' expectations of 45,000 jobs [3][15] - However, the report revised October payrolls lower, showing a loss of 105,000 jobs, and the unemployment rate increased to 4.6%, slightly above the forecast of 4.5% [4][15] Federal Reserve Expectations - Despite mixed labor market signals, expectations regarding Federal Reserve policy remained stable, with a 24% chance of a rate cut next month according to the CME FedWatch Tool [6][15] Economic Sentiment - Analysts suggest the economy is "catching its breath," with job growth holding but showing signs of slowing momentum [7][15] - Investors are encouraged to focus on quality, income, and long-term themes rather than short-term fluctuations [7][15] Sector Performance - Energy stocks were significantly impacted as US crude oil prices fell to their lowest level since early 2021, with major oil producers like Exxon Mobil and Chevron each declining about 2% [8][15] - Technology stocks experienced mixed performance, with profit-taking in high-profile AI companies affecting the broader market [9][15] - Financial and technology stocks were among the day's strongest performers, with Sezzle surging 10.8% after announcing a $100 million stock buyback program [10][15] - Conversely, energy stocks led the laggards, with Navan Inc plunging 14.3% after reporting widening losses [11][15]

Market Overview - The S&P 500 is experiencing declines, primarily driven by weakness in healthcare, energy, financials, and utilities sectors [1] - The Russell 2000 index is down over 1%, while the Dow and S&P 500 are also showing negative performance [2] - The Nasdaq, however, is down only 0.52%, appearing relatively stable compared to other indices [2] Sector Performance - The energy sector has been notably impacted, with West Texas Intermediate oil prices falling nearly 3%, dipping below $55, leading to a 3% decline in the S&P 500 Energy Sector [5] - The Dow lost over 302 points, with 19 of its 30 holdings declining, particularly in financials, healthcare, and energy [3] - The Russell 2000 finished at 2,519.30, down 20 basis points, reflecting weakness across various sectors [4] Notable Stocks - Nvidia remains a standout performer, with a slight increase of 0.14%, amidst broader market declines [1] - Sezzle, a buy now, pay later firm, saw a significant rise of 10.8% following the announcement of a $100 million stock buyback program [9] - UBS Group experienced a 4.8% increase due to institutional activity and easing Swiss regulatory mandates [10] Declining Stocks - Navan Inc reported a decline of 14.3% after widening losses post-IPO and the departure of its CFO [11] - Lumentum Holdings, an optical and photonics company, is down 6.6%, marking a significant drop from previous performance [12] Economic Data - The latest S&P Global PMI readings indicate a decline, with the Composite PMI at 53.0, down from 54.2, and the Manufacturing PMI at 51.8, down from 52.2 [25] - Retail sales grew 3.5% year-over-year in October, a slowdown from the 4.2% growth in September [20]