Black Friday
Happy Friday, Fintech Takers!
If you celebrated Thanksgiving, I hope it treated you well. Mine did what it was supposed to do: food, family, going into the mountains to chop down a Christmas tree with an axe.
Given the holiday, today’s a lighter send.
Back by popular demand and from last year’s vault (that’s right, we’re time traveling!), I bring you a short essay on the modern history of this day and its connection (at least in my brain) to the evolution of payments and lending in recent times.
It’s a meditation paying homage to one of the most American of American holidays: Black Friday.
And Happy Black Friday to those who celebrate!
- Alex
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Did you know Black Friday wasn’t always about doorbuster deals?
The earliest use of the term "Black Friday” traces back to a financial crisis on September 24, 1869, in which speculators tried to corner the US gold market, triggering a massive market crash.
Since then, "Black" has marked financial disasters, which we’ve experienced on other days of the week, like:
⬛ Black Thursday (1929): The start of the Great Depression (stocks fell 11%).
⬛ Black Monday (1987): The Dow’s steepest one-day drop (22.6%).
⬛ Black Tuesday (1929): Another 12% dip in the stock market.
The connection between Black Friday and retail profits came later, gradually tying the day (or, more recently, days) after Thanksgiving as America’s favorite shopping holiday.
In fact, Thanksgiving once fell on the last Thursday of November, but in 1939, President Franklin D. Roosevelt, under pressure from the National Retail Dry Goods Association, moved it up a week to extend the holiday shopping season (wryly dubbed “Franksgiving”).
The shift caused chaos, with only 23 states adopting the change, creating a fractured celebration.
In 1941, Congress officially made Thanksgiving the fourth Thursday in November…so America could sync up its shopping.
Post-WWII, as the U.S. economy boomed, consumerism surged, and retailers zeroed in on holiday shopping.
In the 1950s, police in Philadelphia dubbed the day after Thanksgiving "Black Friday" to describe the chaos of massive crowds and gridlocked traffic as suburban shoppers and tourists flooded the city ahead of the annual Army-Navy football game. From their POV, it was a nightmare of a day: gridlocked traffic, massive crowds, and a literal shopping free-for-all.
By 1961, PR efforts to rebrand it as “Big Friday” flopped, but by the late 1980s, “Black Friday” transformed into a marketing juggernaut, symbolizing profitability as retailers moved from “red” to “black” in their ledgers.
Fast forward:
⬛ 2005: Cyber Monday is invented, revolutionizing online shopping and spurring growth in debit and credit card use.
⬛ 2010: American Express starts Small Business Saturday, bringing small businesses deeper into the holiday shopping craze.
⬛ 2015: Amazon launches “Prime Day,” designed to drain wallets before November’s feeding frenzy starts.
And now?
Black Friday isn’t just a day; it’s a weeks-long spectacle, with shopping kicking off after Halloween.
This evolution (from an infamously bad day for the economy, triggered by irresponsible speculation, to a weeks-long celebration of rampant consumerism) is a bit disturbing to me because I have seen a similar evolution taking place in the financial services ecosystem.
Credit cards, for all their flaws, are designed around the relationship between the issuer and the end customer. You apply for the card. The issuer underwrites you for a credit line based on your income and repayment history. You use the card (responsibly or irresponsibly), and the issuer manages its risk exposure accordingly.
Merchants contribute a large portion of the revenue to issuers (revolving and delinquent customers contribute the rest), some of which is funneled back into rewards for cardholders. However, they don’t exert much direct influence over how consumers use their cards.
Or, at least, they didn’t use to.
Today, credit card issuers have invented all kinds of new ways to empower merchants to dynamically and directly influence cardholders’ shopping behaviors, from card-linked offers to fully integrated digital advertising.
And while these improvements are valuable to merchants, they pale in comparison to merchants’ favorite new fintech invention: BNPL.
Now, in a lot of ways, pay-in-4 BNPL is a significantly less flawed payment and lending product than credit cards. It doesn’t charge interest. It (mostly) doesn’t charge late fees. It is structurally less risky, so it is generally more accessible than credit cards.
However, the tradeoff with BNPL is that it is a product designed around the relationship between the BNPL provider and the merchant. The merchant is the customer, and the consumer is, in some sense, the product. BNPL is designed to enable merchants to directly influence consumers’ shopping behaviors, to buy things that they otherwise wouldn’t. That’s why merchants howl about credit card interchange fees while, at the same time, happily paying merchant discount fees for BNPL that are equal to or higher than credit card interchange fees.
The credit card is a product built for consumers that is being retrofitted to offer more value for merchants.
BNPL is a product built from the ground up for merchants.
If you work in product management in consumer payments or lending today, you are likely spending a lot of your time thinking about how to create value for merchants.
I want to be very clear: this is completely understandable.
People have been bemoaning the increasing commercialization of American society for decades (this is the core message of Miracle on 34th Street, which came out in 1947), but the simple truth behind the emergence of Black Friday and the increasing “shopification” of payment and lending products is that companies are giving consumers what they want.
People enjoy shopping. It’s fun. And it’s profitable for retailers and those who enable them.
However, the challenge of working in financial services is that enabling the activities that consumers most enjoy isn’t always compatible with the long-term financial outcomes that consumers also want us to help them achieve.
The reason that it’s much more difficult to monetize financial health than it is to monetize helping retailers sell more inventory is that it’s much more difficult to help consumers save and invest than it is to help them shop.
We should be clear-eyed about that.
However, on Black Friday, I think it’s worth reaffirming our commitment to doing hard things (and helping our customers do hard things) rather than just continuing to build better easy buttons. As we step into the era of agentic AI — an era that is already beginning to be defined by the development of agentic commerce capabilities — this commitment will be of paramount importance.
Thanks for the read! Let me know what you thought by replying back to this email.
— Alex
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