Understanding Consumer Demand for “Buy Now, Pay Later”

Felix Aidala, Gizem Kosar, Daniel Mangrum and Wilbert van der Klaauw

No 1167, Staff Reports from Federal Reserve Bank of New York

Abstract: Consumer demand for “Buy Now, Pay Later” (BNPL) has surged, but the specific attributes consumers value remain unclear. We conduct a novel probabilistic stated choice experiment varying BNPL attributes across hypothetical scenarios to estimate consumers’ underlying preferences and their willingness to pay (WTP) for each feature. Consumers have a negative WTP for the standard bundle, on average, but younger and lower income consumers have stronger demand. Simulating consumer demand with estimated preference parameters reveals that most shifts away from the standard BNPL bundle reduce demand and create a more negatively selected pool of BNPL users, especially when interest is charged.

Keywords: Buy Now Pay Later (BNPL); payment services; financial inclusion; probabilistic stated choices; survey experiment (search for similar items in EconPapers)
JEL-codes: C93 G41 G51 R22 (search for similar items in EconPapers)
Pages: 84 pages
Date: 2025-10-01
New Economics Papers: this item is included in nep-dcm and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:101928

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DOI: 10.59576/sr.1167

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