Buy now, pay later (BNPL) …on your credit card

Guttman-Kenney, Benedict; Firth, Chris; Gathergood, John

Abstract

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.

Citation

Guttman-Kenney, B., Firth, C., & Gathergood, J. (2023). Buy now, pay later (BNPL) …on your credit card. Journal of Behavioral and Experimental Finance, 37, Article 100788. https://doi.org/10.1016/j.jbef.2023.100788

• Journal Article Type: Article
• Acceptance Date: Jan 6, 2023
• Online Publication Date: Jan 16, 2023
• Publication Date: Jan 16, 2023
• Deposit Date: Jan 9, 2023
• Publicly Available Date: Jul 17, 2024
• Journal: Journal of Behavioral and Experimental Finance
• Print ISSN: 2214-6350
• Electronic ISSN: 2214-6369
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 37
• Article Number: 100788
• DOI: https://doi.org/10.1016/j.jbef.2023.100788
• Keywords: Finance
• Public URL: https://nottingham-repository.worktribe.com/output/15926459
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S2214635023000023
• Additional Information: This article is maintained by: Elsevier; Article Title: Buy now, pay later (BNPL) ...on your credit card; Journal Title: Journal of Behavioral and Experimental Finance; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jbef.2023.100788; Content Type: article; Copyright: © 2023 The Author(s). Published by Elsevier B.V.