Buy Now, Pay Later (BNPL)...On Your Credit Card

Benedict Guttman-Kenney, Christopher Firth and John Gathergood

Papers from arXiv.org

Abstract: We provide the first economic research on `buy now, pay later' (BNPL): an unregulated FinTech credit product enabling consumers to defer payments into interest-free instalments. We study BNPL using UK credit card transaction data. We document consumers charging BNPL transactions to their credit card. Charging of BNPL to credit cards is most prevalent among younger consumers and those living in the most deprived geographies. Charging a $0\%$ interest, amortizing BNPL debt to credit cards - where typical interest rates are $20\%$ and amortization schedules decades-long - raises doubts on these consumers' ability to pay for BNPL. This prompts a regulatory question as to whether consumers should be allowed to refinance their unsecured debt.

Date: 2022-01, Revised 2023-01
New Economics Papers: this item is included in nep-ban, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Journal of Behavioral & Experimental Finance, 2023

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