Who Clicks "Pay Later"? Financial Vulnerability and Buy Now Pay Later Usage

Anu Jose and Jane Kelly
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Jane Kelly: Central Bank of Ireland

No 7/SI/25, Central Bank Staff Insights from Central Bank of Ireland

Abstract: As flexible, short-term, often interest-free Buy Now Pay Later (BNPL) products become increasingly popular, this Insight reveals that individuals displaying certain characteristics of financial vulnerability are using BNPL to a greater extent, more frequently and simultaneously across multiple providers. These characteristics include a history of being refused credit elsewhere, being late on loan repayments previously, exhibiting low financial literacy, and overconfidence. While BNPL may be a convenient and affordable method to pay for products, our analysis highlights that it is being disproportionately used by those least equipped to manage the risks, raising concerns about debt accumulation. This underlines the importance of clear disclosures designed with behavioural insights in mind and the implementation of credit checks by providers that take into account total financial commitments by prospective borrowers.

Date: 2025-10
New Economics Papers: this item is included in nep-fle and nep-pay
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