How and Why Do Consumers Use “Buy Now, Pay Later”?

Felix Aidala, Daniel Mangrum and Wilbert van der Klaauw

No 20240214, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In a previous post, we highlighted that financially fragile households are disproportionately likely to use “buy now, pay later” (BNPL) payment plans. In this post, we shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility. Our results reveal substantially different use patterns, as more-fragile households tend to use the service to make frequent, relatively small, purchases that they might have trouble affording otherwise. In contrast, financially stable households tend to not use BNPL as frequently and are more likely to emphasize that BNPL allows them to avoid paying interest on credit-finance purchases. We explore below what drives these differences and consider the implications for future BNPL use.

Keywords: Buy Now Pay Later (BNPL); credit; consumer finance; household borrowing; inequality; financial inclusion (search for similar items in EconPapers)
JEL-codes: D14 (search for similar items in EconPapers)
Date: 2024-02-14
New Economics Papers: this item is included in nep-ban, nep-fle and nep-pay
References: Add references at CitEc
Citations:

Downloads: (external link)
https://libertystreeteconomics.newyorkfed.org/2024 ... e-buy-now-pay-later/ Full text (text/html)
https://newyorkfed.org/medialibrary/media/research ... ay-later_aidala_data Chart data (application/vnd.ms-excel)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:97750

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Liberty Street Economics from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().