Who Uses “Buy Now, Pay Later?”

Felix Aidala, Daniel Mangrum and Wilbert van der Klaauw

No 20230926, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: “Buy now, pay later” (BNPL) has become an increasingly popular form of payment among Americans in recent years. While BNPL provides shoppers with the flexibility to pay for goods and services over time, usually with zero interest, the Consumer Financial Protection Bureau (CFPB) has identified several areas of potential consumer harm associated with its growing use, including inconsistent consumer protections, and the risk of excessive debt accumulation and over-extension. BNPL proponents have argued that the service enables improved credit access and greater financial inclusion, with approval being quick and relatively easy. More research is needed to assess the overall risks and benefits of BNPL for consumers. As a first step, we draw on new survey data to examine the background and circumstances of consumers who receive and take up BNPL offers. We find both the availability and use of BNPL to be fairly widespread but see disproportionate take-up among consumers with unmet credit needs, limited credit access, and greater financial fragility. While BNPL expands financial inclusion, especially to those with low credit scores, there is a risk that these payment plans contribute to excessive debt accumulation and over-extension.

Keywords: Buy Now Pay Later (BNPL); credit access; household borrowing; financial inclusion; inequality (search for similar items in EconPapers)
JEL-codes: D14 (search for similar items in EconPapers)
Date: 2023-09-26
New Economics Papers: this item is included in nep-ban, nep-fle and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://libertystreeteconomics.newyorkfed.org/2023 ... s-buy-now-pay-later/ Full text (text/html)
https://newyorkfed.org/medialibrary/media/research ... y-Now-Pay-Later_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:96929

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 ().