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

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.

Keywords: BNPL, buy now pay later, consumer credit, consumer financial protection, credit cards, FinTech, household finance, regulation

JEL Classification: G51, G28, D04, D18, M38

Suggested Citation: Suggested Citation

Guttman-Kenney, Benedict and Firth, Chris and Gathergood, John, Buy Now, Pay Later (BNPL)...On Your Credit Card (January 6, 2023). Journal of Behavioral & Experimental Finance, 2023., Available at SSRN: https://ssrn.com/abstract=4001909 or http://dx.doi.org/10.2139/ssrn.4001909