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: We estimate consumer preferences for “Buy Now, Pay Later” (BNPL) using a large-scale probabilistic stated choice survey experiment. Average willingness to pay (WTP) for the standard BNPL bundle is negative, but younger, lower-income, and less credit-worthy consumers exhibit higher demand. The share with positive estimated WTP closely matches actual BNPL take-up. Consumers strongly dislike interest charges and hard credit checks. Counterfactual simulations show that incorporating these features into the standard bundle lowers demand and worsens adverse selection toward riskier borrowers. These findings have implications for the sustainability of the BNPL market, consumer credit supply, and quality of securitized BNPL receivables.

Keywords: Buy Now Pay Later (BNPL); consumer finance; 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: 104 pages
Date: 2025-10-01
New Economics Papers: this item is included in nep-dcm, nep-exp, nep-fle, nep-pay and nep-reg
Note: Revised February 2026.
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1167.pdf Full text (application/pdf)
https://www.newyorkfed.org/research/staff_reports/sr1167.html Summary (text/html)

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:fednsr:101928

Ordering information: This working paper can be ordered from

DOI: 10.59576/sr.1167

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().