Buy Now, Pay Later (BNPL): Financial Innovation and Disruption in Consumer Credit

Abstract

BNPL services significantly changed the way consumers make purchases because they allow them to pay in small installments. Though the literature has largely focused on the determinants of BNPL adoption, relatively little attention has been given to its effects on consumers' real buying behavior and post-purchase outcomes. The current study examines how salient BNPL features such as installment-based pricing, perceived affordability, and reduced payment salience affect consumer decision-making. Specifically, it evaluates the existence of these characteristics to support trade-up phenomena and impulse buying. The research also deals with a post-purchase consequence that has not been previously studied in detail: financial stress. The hypothesis is that BNPL creates an impression of reduced product cost, and therefore, it intensifies impulsive purchasing behavior, trade-up behavior, and the resultant postpurchase regret. The research is an empirical test of these propositions through a surveybased methodology employed in a theoretical framework. Combining the cognitive, behavioural, and affective aspects of consumer decision-making, the research aims at filling a major gap in the body of knowledge about BNPL and at providing practical suggestions that can guide marketers and policymakers interested in responsible consumption promotion.