Buy Now, Spend More, Pay Later: Behavioural Mechanisms of Buy Now Pay Later Products

Anu Jose, Jane Kelly, Michael King and Yvonne McCarthy
Additional contact information
Jane Kelly: Central Bank of Ireland
Michael King: Trinity College Dublin

No 15/RT/25, Research Technical Papers from Central Bank of Ireland

Abstract: We study the behavioural effects of Buy Now, Pay Later (BNPL), a rapidly expanding form of consumer credit. Through an experiment conducted with a nationally representative sample in Ireland, we find that participants spend, on average, 4.39% more when using BNPL for purchases compared to debit cards. We demonstrate mental accounting effects where an inflated perception of available funds due to prior BNPL usage leads to a 22.2% higher likelihood of spending on a discretionary product. In parallel, we show the importance of anticipatory effects of such a credit innovation, whereby the mere expectation of future access to BNPL increases current debit card spending by 3.1%. While salient risk disclosures improve understanding of BNPL risks, they do not significantly affect usage or spending patterns. These findings highlight the dual psychological impact of BNPL on spending, support the rationale for consumer protection efforts, and establish the relevance of BNPL as a financial product of interest to macroeconomic policymakers.

Keywords: Mental Accounting; Consumer Credit; Behavioural Finance; Deferred Payments. (search for similar items in EconPapers)
JEL-codes: G4 G41 G51 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-exp, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.centralbank.ie/docs/default-source/pub ... df?sfvrsn=9b816e1a_8 (application/pdf)

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:cbi:wpaper:15/rt/25

Access Statistics for this paper

More papers in Research Technical Papers from Central Bank of Ireland Contact information at EDIRC.
Bibliographic data for series maintained by Fiona Farrelly ().